‘Landmark decision’: US regulator approves Bitcoin ETFs (2024)

FAQs

Is there a spot approval for BTC ETF? ›

There were already crypto-related ETFs and trusts out there, but there has never been a spot Bitcoin ETF on the market before the Jan. 2024 approval.

In a move widely anticipated, and eagerly awaited, by the industry, the US Securities and Exchange Commission has approved the first US-listed exchange-traded funds (ETFs) to track bitcoin. Many in the sector are calling this a watershed moment for the crypto industry.

On January 10, 2024, the US securities regulator approved the first US-listed exchange-traded funds to track bitcoin, in a watershed for the world's largest cryptocurrency and the broader crypto industry.

It depends

They are subject to the regulatory standards of financial markets and can offer a layer of security and transparency not always present in direct crypto investing. However, investing in a bitcoin ETF does not eliminate the risks associated with the underlying asset: bitcoin.

Ten years after the first spot Bitcoin exchange-traded fund application was filed in the U.S., the Securities and Exchange Commission (SEC) finally approved spot Bitcoin ETFs on January 10, 2024.

The SEC denied that application in March 2017, generally concluding that the crypto asset market and regulatory oversight regarding crypto assets were not sufficiently mature.

If long-term price performance is your only investment goal, then the new Bitcoin ETFs make a lot of sense. However, you could prefer direct-asset ownership of Bitcoin if you are concerned about the regulatory or legal aspects of crypto.

Are bitcoin ETFs FDIC insured? ›

However, the Bitcoin Custodian is not a banking institution or otherwise a member of the Federal Deposit Insurance Corporation (“FDIC”) and, therefore, deposits held with or assets held by the Bitcoin Custodian are not FDIC-insured.

When you purchase ETFs, you don't own the underlying Bitcoin, thus limiting your control over your investment. The Bitcoins held in the ETF are all under custodial ownership, which means if the custodian were to suffer from a security breach or loss of access, it would greatly affect the investors holding the ETFs.

Bitcoin futures ETFs are exchange-traded funds that aim to offer exposure to the price movements of Bitcoin. The ETFs use futures contracts to achieve this goal. Fund managers purchase these contracts and bundle them into a fund.

Futures bitcoin ETFs help investors bet on what bitcoin may be worth in the future via bitcoin futures contracts, but they don't hold bitcoin as an underlying asset. Spot bitcoin ETFs typically do hold bitcoin as the underlying asset, and the price of the ETF is closely tied to fluctuations in its value.

"While we approved the listing and trading of certain spot bitcoin (ETFs) today, we did not approve or endorse bitcoin," Gensler said in the statement. "Investors should remain cautious about the myriad risks associated with bitcoin and products whose value is tied to crypto."

Spot Bitcoin ETFs are available at many online brokers that offer ETFs, often with no trade commission. One major brokerage, Fidelity, had its own spot Bitcoin ETF, the Fidelity Wise Origin Bitcoin Fund (FBTC), approved.