Bitcoin’s price briefly rose to $49,000 on Thursday before dipping to $46,000. Optimism that the funds were nearing approval by the Securities and Exchange Commission drove Bitcoin’s price up more than 60 percent over recent months to its highest levels since the market imploded in 2022.
The approvals were a major victory for the crypto industry as it gears up for a series of legal battles with the federal government. The S.E.C. has sued Coinbase, the largest U.S. crypto exchange, and several other major firms, arguing that they have illegally marketed unregistered securities, a possible existential threat to the industry.
In a statement announcing the approvals of the E.T.F.s, Gary Gensler, the S.E.C. chair, said the agency did not “approve or endorse Bitcoin.” He said most crypto trading platforms were breaking the law and “often have conflicts of interest.”
Historically, anyone who wanted to invest in Bitcoin or another cryptocurrency had to store the asset in specialized wallets or open accounts on crypto exchanges, like Coinbase and Binance, that have faced regulatory scrutiny. Many investors have struggled to understand the intricacies of these online platforms, or have grown frustrated with bugs, hacks and high transaction fees.
An E.T.F. offers a simpler option. Rather than buy Bitcoin outright, with all its risks and inconvenience, investors buy shares in an E.T.F. that contains the currency. The funds are offered on traditional stock exchanges, in a format that many wealth managers have embraced.
Originally posted 2024-01-11 20:41:17.