Asset managers in the United States are still waiting for the U.S. Securities and Exchange Commission (SEC) to approve trading of spot Bitcoin ETF funds. On Tuesday, a false post on the SEC’s official social media account caused chaos. The SEC will decide on Wednesday whether to approve the application of asset management companies Ark Investments and 21Shares to launch a spot Bitcoin ETF fund. More than a dozen Bitcoin ETF applications, including those from BlackRock, Fidelity and VanEck, are also awaiting approval.
These products will be a game changer for Bitcoin, allowing institutional and retail investors to invest in Bitcoin without directly holding it. It is also expected to provide a strong boost to the cryptocurrency industry, which has been plagued by a series of scandals.
Multiple industry executives said earlier this week that they expected the SEC to approve ETF products from companies such as Ark Investments and 21Shares.
The SEC has not yet said how it will make its decision. A spokesman said the SEC does not comment on related applications.
On Tuesday evening local time in the United States, the SEC’s X account announced that all products had been approved. That caught industry insiders and the media off guard, while executives at the companies involved tried to understand what was going on. The SEC quickly denied and deleted the post and said it was investigating the incident.
Multiple sources said late Tuesday that the apparent hack would not derail the approval process.
These ETF issuers this week disclosed planned ETF fees, which are typically one of the final details hammered out before an offering. Sources said that at least three companies have submitted or are preparing to submit applications to the SEC to launch related products on Thursday. The sources declined to be named because ongoing negotiations with regulators are confidential.
Josh Gilbert, a market analyst at eToro, said Tuesday’s hack “definitely disrupted the Bitcoin market,” but all signs pointed to the SEC being ready to approve the products.
Analysts at Standard Chartered Bank said this week that these ETFs could attract $50 billion to $100 billion in funding this year alone, pushing Bitcoin prices to $100,000. Some analysts have said that capital inflows in the next five years will be close to $55 billion.
Andrew Bond, managing director of Rosenblatt Securities and a senior financial technology analyst, said: "This is a huge benefit to the institutionalization of Bitcoin as an asset class. The approval of these ETFs will further legitimize Bitcoin."
In recent months, the price of Bitcoin has increased by more than 70% in anticipation of the approval of a Bitcoin ETF. Following the fake post, the price of Bitcoin surged to around $48,000, but fell back below $45,000 minutes later.
The approval of these ETF funds will mark a 180-degree change in the SEC's attitude. For the past 10 years, the SEC has refused to approve Bitcoin ETFs due to concerns that they were vulnerable to market manipulation. SEC Chairman Gary Gensler has long argued that Bitcoin is not a security and has taken a hard line against the entire cryptocurrency industry, finding that many companies have violated U.S. securities laws.
Last year, the likelihood of the SEC eventually approving a Bitcoin ETF increased significantly. Previously, a U.S. federal appeals court ruled that the SEC erred in rejecting GrayScale Investments’ application to convert its existing Grayscale Bitcoin Trust (GBTC) into an ETF fund. The ruling forced the SEC to review its position.
The ETF issuers are also trying to monitor the Bitcoin market by coordinating Coinbase Global, the largest U.S. cryptocurrency exchange, to work with two ETF exchanges to address SEC concerns that the market is being manipulated.
However, some investor rights groups still urge the SEC not to approve these products, arguing that Bitcoin is still too immature. Gensler himself warned on his personal X account on Monday that investing in crypto assets “can be extremely risky.”
Dennis Kelleher, CEO of BetterMarkets, said Tuesday's false tweets highlighted the risks. “This once again demonstrates why Bitcoin is the financial product of choice for criminals around the world.”