Spot bitcoin ETFs will be in SEC’s crosshairs

investmentnews.com:

The SEC has at long last approved spot-price bitcoin ETFs, though it did not do so entirely willingly and will all but certainly be watching product providers very closely.

On Wednesday afternoon, the regulator issued a statement indicating that it had indeed approved a host of exchange-traded products, a development that came a day after its Twitter account was compromised and posted a false announcement that it had done so.

But the SEC moved forward almost entirely because of the results of a lawsuit brought by one applicant, Grayscale, whose request to convert its bitcoin trust into an exchange-traded product had been denied. An appellate court ruling last year found that the SEC didn’t adequately explain why it rejected the application.

“Based on these circumstances and those discussed more fully in the approval order, I feel the most sustainable path forward is to approve the listing and trading of these spot bitcoin ETP shares,” SEC chair Gary Gensler said ina statement.

The decision applies only to ETPs holding bitcoin and does not extend to other cryptocurrencies, he said.

“Investors today can already buy and sell or otherwise gain exposure to bitcoin at a number of brokerage houses, through mutual funds, on national securities exchanges, through peer-to peer payment apps, on non-compliant crypto trading platforms, and, of course, through the Grayscale Bitcoin Trust. Today’s action will include certain protections for investors,” Gensler said.

Those protections include required disclosures from product providers and the fact that the ETPs will be traded on regulated securities exchanges, he noted. Further, because the SEC is evaluating applications for each product separately, the approval process creates a level