US SEC Approves, A New Era for Bitcoin ETFs:
The Securities and Exchange Commission (SEC) has approved the first US-listed Bitcoin-tracking exchange-traded funds (ETFs), aiming to improve investor accessibility and build a more stable and regulated cryptocurrency market. The approval of 11-spot Bitcoin ETFs will make it easier for retail investors to access ETFs through their current brokerage accounts, as they are listed on regulated US stock exchanges and subject to close supervision. Ashish Singhal, CEO of CoinSwitch and PeepalCo, announced that an ETF will be the simplest form of Bitcoin exposure for retail users, providing a seamless way for investors to benefit from price movements without the complexities of digital wallets or drastic investment strategy overhauls. This influx of retail investors will familiarize crypto further and onboard millions of new users. Bitcoin, the most well-known and established virtual currency, has returned 166% in the past year and reached its highest point ever on November 10, 2021. The ETFs will trade on major exchanges like NYSE Arca, Nasdaq, and Cboe BZX Exchange, increasing credibility for the cryptocurrency market and creating opportunities for a larger investor pool to participate.
Effects on the Indian Economy:
The Securities Exchange Commission (SEC) has approved eleven spot bitcoin ETFs in the US, including products from BlackRock, Vanguard, Franklin Templeton, Valkyre, Fidelity, and Invesco. These ETFs are expected to stabilize the price of bitcoin and lower liquidity risks, with institutional funding expected to reach around $5 billion in the next 45 days. Indian investors can buy US ETFs directly through domestic or foreign brokers, and the Reserve Bank of India's Liberalized Remittance Scheme governs US ETF investments. Spot bitcoin ETFs mirror the value of bitcoin by trading on traditional US exchanges, similar to ETFs in India that track indices or commodities. Tax advantages for bitcoin ETFs include lower capital gains taxation rules in India, which apply to equity funds, debt funds, cryptocurrency assets, and foreign investments made through LRS. However, the Indian financial market ecosystem is thought to differ significantly from that of the US, making it more difficult to approve products like spot bitcoin ETFs.
With a $4.6 billion trading frenzy, Bitcoin ETFs make history:
With the approval of eleven spot bitcoin exchange-traded funds (ETFs), the U.S. Securities and Exchange Commission (SEC) has turned the tide in the cryptocurrency market. If digital assets—which many professionals still view as risky investments—can gain traction, it will be determined by these products. The prices of ether, the second-largest cryptocurrency, were up 2.79% at $2597.95, and bitcoin, which was last up 0.77% at $46,303, was the highest since December 2021 as a result of the ETF launches.
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The approval from the regulator spurred fierce competition among issuers, some of whom even cut their product fees well below the industry standard for U.S. ETFs before Thursday's launch. The fees for the new bitcoin exchange-traded funds (ETFs) vary from 0.2% to 1.5%; however, several companies offer fee waivers for a limited time or for a specific dollar amount of assets. With over $28 billion in assets under management, Grayscale's application to convert its current bitcoin trust into an exchange-traded fund (ETF) was approved on Thursday, making it the largest bitcoin ETF globally. The potential amount of money that spot bitcoin exchange-traded funds (ETFs) could draw varies widely; analysts at Bernstein forecast that flows will gradually rise to over $10 billion in 2024, while Standard Chartered analysts think the ETFs could bring in $50 billion to $100 billion this year alone.
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