What Is Spot Bitcoin ETF?
By Kapil Rajyaguru
There is a buzz about spot bitcoin Exchange Traded Fund (ETF) in the market after the financial services giant BlackRock approached the U.S. Securities and Exchanges Commission (SEC), seeking permission to launch the financial product based on Bitcoin futures.
Ever since the first application for U.S. Bitcoin exchange traded fund filed in 2013, a spot Bitcoin ETF has become a Holy Grail for the crypto community. Because, till now, the U.S. financial market regulator has rejected every application for a spot market Bitcoin ETF.
Come 2023, things have started to change for better. Global regulation for crypto assets is at, either works, or has been finalized/approved. A case in point here is MiCA approval by European Union, which hopes to bring changes in financial markets.
Amid growing demand for cryptocurrency regulation, crypto enthusiast have been lobbying around building case for the regulatory oversight, financial market regulators are giving way to investor demand.
In such move, US SEC has formally accepted spot Bitcoin ETF application of BlackRock and Valkyrie which marks a crucial step forward for what is currently the most closely monitored Bitcoin-related proposal submitted to the financial market regulator.
So let’s understand what spot Bitcoin ETF…is
As the name suggest, a spot Bitcoin ETF are marketable securities value of which is derived from the Bitcoin futures, which are currently traded on Chicago Mercantile Exchange. Obviously, the futures price are based on spot Bitcoin price.
A spot Bitcoin ETF would enable the tracking of Bitcoin’s value without the requirement of directly holding the asset, making it tradable on traditional stock exchanges.
So in a nutshell, the bitcoin spot ETF would provide easier access to the asset, allowing investors to buy and sell the digital currency through a brokerage account.
SEC accepting the proposal at first place is fueling optimism among investors.
If bitcoin spot ETFs are approved, investors should treat them like any other asset. You should always do your own research and your own due diligence before taking risks with your money.
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