According to a report from Fox Business, the Securities and Exchanges Commission (SEC) is on the verge of approving a “spot” bitcoin exchange-traded fund.
A bitcoin spot ETF (exchange-traded fund) would allow stock market investors to peg their money to the current market price of bitcoin. At the time of writing, bitcoin hovered around $43,400 following a one-month rally that added 15.79% to the crypto’s value.
Naturally, some investors want in on the potential profits — but may be wary of crypto exchanges, which have had a checkered history. The collapses of FTX, QuadrigaCX, and other exchanges have led to calls for regulation; in May 2023, the Texas legislature passed a law requiring digital asset service providers to submit an annual report to the state’s Department of Banking.
A Bitcoin spot ETF could have a dramatic effect on crypto markets.
While direct crypto exchanges are inherently risky, a spot ETF would be more resistant to fraud in theory (though all investments carry the risk of serious losses).
The SEC must approve the ETF, but seems positioned to do so — and perhaps approve several spot ETF applications at once. That would likely raise the Bitcoin market cap substantially.
And because many other cryptocurrencies have their values pegged to bitcoin — directly or indirectly — the industry could see remarkable growth. While the days of 30,000% rallies are probably over, Bitcoin and other cryptos could continue the steady growth they saw in 2023.
Related: Atomic Wallet Hack: What We Know (And What To Do Next)
Mainstream acceptance of cryptocurrencies could draw more investors into the markets.
As cryptocurrencies become more robust, their use cases will likely expand. We’ve seen some interesting examples, from the storage-distribution capabilities of Siacoin to the various applications of Ethereum, which became substantially more environmentally friendly following its 2022 switch to a Proof-of-Stake model.
Of course, investors will actually have to maintain access to their crypto to see a return on investment. In 2021, we estimated that lost passwords are responsible for an astounding 90% of cryptocurrency losses.
And while exchanges offer some protection from password loss, they’re fundamentally less secure than “cold” wallets.
Related: Are Crypto Wallets Safer Than Crypto Exchanges?
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