Bitcoin Spot ETF Approved: A Decade of Hard Work, A New Era Begins

The U.S. Securities and Exchange Commission (SEC) has approved 11 Bitcoin Spot ETFs, which will be listed and traded on major exchanges. This marks the formal connection of Bitcoin with the global financial system and is an important milestone in the history of cryptocurrency development.

This decision was not easy to make, having gone through a decade-long review process. Even after approval, there are still many doubts and challenges regarding the prospects of the Bitcoin ETF.

Reassessing Bitcoin

With the release of the approval documents, SEC commissioners have issued statements reflecting differing positions. Some commissioners believe that the SEC's long-standing refusal to approve Bitcoin ETFs has caused unnecessary market frenzy. If these products could be treated in a more conventional manner, perhaps the current excessive attention could be avoided.

Bitcoin, as an innovative digital asset, can be likened to the gold that was first mined thousands of years ago. Now, people live in the digital age, where the tools and outputs of "mining" have been digitized. The launch of the Bitcoin Spot ETF will allow investors to gain Bitcoin investment returns by purchasing ETF shares, without the need to directly hold and manage Bitcoin.

If we could view Bitcoin with a more "normal" perspective, the market might not have to wait for a decade to witness this breakthrough.

Two Major Obstacles to SEC Decisions

In the past decade, the two most questioned aspects are mainly the "security issues of Bitcoin custody" and the "potential manipulation of Bitcoin ETFs." These two points are emphasized again in the approval documents.

The original intention of designing a Bitcoin Spot ETF is to provide investment avenues for funds, institutional investors, and retail investors who cannot directly hold Bitcoin. Regarding the security of Bitcoin custody, leading wallet service providers in the Web3 industry can offer reference experiences or direct collaboration.

Concerns about market manipulation were highlighted by SEC Commissioner Caroline A. Crenshaw in a statement, pointing out issues such as fraud, manipulation, high concentration, and insufficient regulation in the global Bitcoin spot market. Although the SEC's analysis found a high correlation between Bitcoin spot prices and futures prices, this correlation does not completely eliminate the risk of market manipulation.

The Bitcoin spot market is similar to the early development of the gold market, exhibiting characteristics of decentralization and multi-centers. Relying solely on a single regulatory agency or regulating this burgeoning spot market through the futures market is insufficient. Utilizing blockchain technology and data analysis to address the issues brought about by technology is a more effective approach.

Future Outlook

1. Companies providing technological solutions in the Web3 industry will迎来发展机遇. With the integration of the cryptocurrency market and traditional financial markets, the demand for security technologies and monitoring tools will continue to increase.

2. The launch of the ETF does not conflict with the concept of decentralization. The Bitcoin spot market has already reached a certain scale, and various institutions are attracting investors by lowering fees. As the scale of the ETF expands, management fees may further decrease.

3. The approval of the Bitcoin Spot ETF has set a precedent for other non-securities crypto asset ETPs. However, future ETF applications for other crypto assets still need to clarify whether they fall under securities. The review results for the Ethereum ETF are worth paying attention to, and the SEC is expected to provide its final response as early as May 2024.

Despite ongoing concerns, the approval of the Bitcoin Spot ETF marks a significant victory for the market. With the expansion of compliant investment channels and the maturation of supporting technologies, the cryptocurrency market is expected to gradually move towards maturity. The U.S. cryptocurrency market is entering a new phase of development.