Since the Securities and Exchange Commission (SEC) approved Bitcoin to be traded as an Exchange-Traded Product (ETP), the price of the cryptocurrency has experienced a 15% decrease. The approval for the listing of spot bitcoin exchange-traded product shares was granted on January 10th.
According to a news article by the Financial Times, Bitcoin dipped below $39,000 for the first time since early December. Following the SEC's approval, 10 new ETP funds were launched, collectively amassing $4.7 billion. Analysts studying this price change suggest that a significant portion of this $4.7 billion came from investors transitioning out of Grayscale. Known for charging higher fees than its competitors offering ETPs, Grayscale's funding has seen a decrease from $28 billion to $22 billion over the past month. The company imposes a 1.5 percent management fee, in stark contrast to BlackRock's mere 0.12 percent charge on its ETP.
In a speech delivered by Gary Gensler, chair of the SEC, he explained that it took considerable time for the Commission to approve bitcoin exchange-traded product shares. Between 2018 and March 2023, the Commission disapproved over 20 filings to create Bitcoin ETPs. However, after the U.S. Court of Appeals for the District of Columbia asserted that the Commission had not adequately justified its disapproval for trading ETPs, Gensler decided that approving Bitcoin ETP shares was indeed the best course of action.
Gensler further clarified that sponsors of Bitcoin ETPs will be obligated to provide comprehensive and truthful disclosure about their products in public registration statements and periodic filings. These products will be listed and traded on registered national securities exchanges which are required to have rules in place to prevent fraud and manipulation. While existing rules and standards of conduct will apply to approved ETP purchases and sales, Gensler stressed that the Commission does not endorse cryptocurrency trading platforms or intermediaries. In addition, the Commission is currently reviewing registration statements for 10 spot bitcoin ETPs simultaneously to ensure fairness and competition.
