A New Era for Bitcoin: SEC Approves Bitcoin ETFs

The world of cryptocurrency has taken a giant leap forward. On January 10, 2024, the US Securities and Exchange Commission (SEC) gave its long-awaited nod of approval to a collection of spot bitcoin exchange-traded funds (ETFs). This monumental decision is set to reshape the landscape of crypto investment, offering new ways to invest in Bitcoin.

The Approval of Bitcoin ETFs in the US

The SEC's approval comes as a breath of fresh air for 11 issuers who had applied for Bitcoin ETFs, marking what could be the first wave of approvals. Among those given the go-ahead are big names such as ARK Invest (ARKK), BlackRock (BLK), VanEck, WisdomTree, Fidelity, Invesco, Franklin, Hashdex, Valkyrie, and Grayscale.

This decision indicates that Bitcoin, and cryptocurrency in general, is set to take centre stage in the financial world in 2024.

Why This Matters

The backing of renowned financial institutions like Blackrock, Fidelity, Invesco, and others adds to the long-term credibility of Bitcoin as an asset class, ultimately boosting the entire crypto industry. With this approval of Bitcoin ETFs, it opens the door to a fresh wave of users into the world of crypto and could pave the way for potential future ETFs for other assets, including Ethereum.

An Introduction to Bitcoin ETFs

For those new to the concept, an ETF is an investment fund that tracks the performance of an underlying asset – be it stocks, currencies, precious metals like gold, or in this case, bitcoin. It offers investors exposure to the value of the underlying asset without direct ownership. These ETFs trade on traditional stock exchanges, with their value fluctuating based on the price of the underlying asset.

Exposure to Bitcoin

The launch of Bitcoin ETFs in the US simplifies the process of investing in Bitcoin, making it more accessible to investors. Instead of purchasing and storing Bitcoin directly, investors can now access these ETFs.

Bitcoin ETFs in Canada

While Bitcoin ETFs are a recent development in the US, Canada has been ahead of the curve, with several Bitcoin ETF products already flourishing in the market. These products have proven to be popular with investors seeking exposure to Bitcoin while mitigating the risks associated with handling and storing the cryptocurrency directly.

Bitcoin vs. Bitcoin ETFs: What's the Difference?

While both investment vehicles are regulated in Canada, there are notable differences between buying Bitcoin and buying a Bitcoin ETF:

  1. Trading Hours: Bitcoin trading is open 24/7 on crypto trading platforms like Bitbuy, whereas ETFs are only traded during market hours.
  1. Management Fees: While holding Bitcoin doesn't incur management fees, ETFs do have such fees for holding the asset that accumulate over time
  1. Self-Custody: With purchasing Bitcoin through a platform like Bitbuy, you have the option for self-custody. This isn't possible with Bitcoin ETFs as you can't withdraw the Bitcoin held in the fund.

In conclusion, the recent approval of Bitcoin ETFs in the United States is a significant milestone in cryptocurrency's journey towards wider acceptance. As the landscape continues to grow and evolve, at Bitbuy we remain committed to our mission to provide Canadian investors with a safe and secure platform for purchasing Bitcoin and other cryptocurrencies. We have been proud to be part of Canada's pioneering efforts in embracing Bitcoin ETFs, and we continue to watch with excitement as the industry moves forward.  

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