Tuesday, 18 June 2024
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Amid cautious anticipation, the US SEC permits Bitcoin ETFs

  • The US SEC has allowed financial firms to establish Bitcoin ETFs.
  • These ruling permits eleven companies to offer ETFs based on Bitcoin on significant US exchanges.
  • Following the SEC’s announcement, the price of Bitcoin dropped $1,000 from its recent peak to about $46,300.

It appears that the largest cryptocurrency token in the world may make a comeback as the US Securities and Exchange Commission (SEC) has allowed financial firms to establish Bitcoin ETFs.

These ruling permits eleven companies, such as Franklin Templeton, Fidelity, and BlackRock, to offer exchange-traded funds (ETFs) based on Bitcoin on significant US exchanges.

Bitcoin ETFs

Bitcoin ETFs are anticipated to bring the cryptocurrency market back to life. Since its high in November 2021, the market has struggled with falling token prices, abandoned projects, and exchange failures.

Following the SEC’s announcement, the price of Bitcoin dropped $1,000 from its recent peak to about $46,300. By the end of this year, Standard Chartered analyst Geoff Kendrick forecasted that institutional investments in Bitcoin could reach $100 billion through exchange-traded funds (ETFs). He also predicted that the price of Bitcoin would rise to $100,000 this year and $200,000 the next year.

By avoiding the difficulties of buying Bitcoin directly, Bitcoin ETFs provide investors with a more convenient way to interact with the cryptocurrency asset.

Yet, some doubters, like Jamie Dimon of JP Morgan, contend that the real applications of Bitcoin are in the areas of terrorism funding, tax evasion, sex trafficking, and anti-money laundering. Gary Gensler, the chair of the SEC, said that the action shouldn’t be interpreted as the US market regulator endorsing cryptocurrency.

Preliminary comments in India are positive; Sidharth Sogani of cryptocurrency research firm Crebaco Global estimates that in the next 45 days, ETFs would bring in roughly $5 billion. Since they give authority to centralized financial organizations, ETFs are perceived by some as the answer to the volatility in the cryptocurrency market, but this defies the whole purpose of a “decentralized” currency, according to others.

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