Yesterday, the SEC approved all 11 applications for a spot Bitcoin ETF. According to the document, "After careful consideration, the Commission concluded that the proposals comply with the Exchange Act, as well as the rules and regulations applicable to national securities exchanges."

Alongside the approval order, the SEC published a speech by Chairman Gary Gensler. He affirmed the agency's decision but issued a warning about the associated risks.

According to the official, digital gold is primarily a "speculative, volatile asset that is also used for illegal activities, including ransomware, money laundering, sanctions evasion, and terrorism financing."

"While today we approved the listing and trading of some spot Bitcoin ETFs, we do not approve or disapprove of Bitcoin itself. Investors should exercise caution regarding the numerous risks associated with it and products whose value is tied to the asset," he added.

In light of these events, the analytical department of Trillion Platform has written a piece on how this historic event will impact the Web3 industry.

As Bitcoin and the broader crypto asset space gain increasing recognition and popularity, innovative methods to expand their influence have emerged. One notable recent development is the introduction of Bitcoin ordinals, enabling the creation of Bitcoin-native NFTs through inscriptions on satoshis.

Another avenue for broadening the impact of Bitcoin, sparking numerous discussions and legal debates, is the concept of an exchange-traded fund (ETF) specifically focused on Bitcoin.

This article aims to provide a foundational understanding of how ETFs operate, delving into ongoing efforts to establish a Bitcoin ETF and exploring the potential consequences for the wider digital asset landscape. The insights provided will be relevant to enthusiasts of Core Chain and Core, given Core's alignment with Bitcoin mining and the Bitcoin ecosystem, making its evolution and future particularly intriguing.

What is an ETF?
ETFs, often described as baskets of assets, are typically designed to track an index or a specific segment of the economy. Unlike purchasing shares of individual biotech companies, investors can acquire shares of a biotech-focused ETF to swiftly gain exposure to a diverse range of relevant companies simultaneously.

While ETFs share similarities with mutual funds, a key distinction lies in their ability to be bought and sold on the stock market, offering a level of liquidity that mutual funds do not provide. Both ETFs and mutual funds, however, offer a straightforward means of diversification, a primary appeal for investors (in addition to liquidity demand).

What is a Bitcoin ETF?
Investors are drawn to ETFs due to the significant reduction in friction associated with making investments. While one could individually research and purchase shares of the companies within a biotech ETF, having the ETF available eliminates the need for such complexity.

Similarly, a Bitcoin spot ETF would simplify the process for traditional finance (tradfi) investors to access Bitcoin without delving into the intricacies of crypto wallets and private-key storage, topics that command significant attention within Bitcoin circles. Additionally, a Bitcoin spot ETF could offer a regulated and safer channel for participating in the Bitcoin market boom, although self-custody remains preferable for those with the ability and knowledge to manage it.

Discussions have also centered around a related financial instrument, Bitcoin futures ETFs. In contrast to holding actual digital assets like a spot ETF, a Bitcoin futures ETF would trade in futures contracts speculating on Bitcoin's future price movements. Until recently, all seven existing Bitcoin ETFs dealt exclusively in futures contracts.

In a broader context, a Bitcoin spot ETF would serve as a bridge between the traditional finance (tradfi) and web3 domains, fostering substantial interaction between these previously distinct realms.

The Landmark Approval of a Bitcoin ETF

This significant milestone recently marked a substantial leap forward. On January 10th, 2024, the Securities and Exchange Commission (SEC) announced the approval of the first Bitcoin spot ETF. Applications from eleven issuers, including Valkyrie, Fidelity, Hashdex, ARK Invest, BlackRock, and others, were given the green light, with trading scheduled to commence the following morning. This development is expected to unleash a considerable influx of institutional investment. Bitcoin, once viewed as an unconventional and exotic asset class, is now poised to become a standard component of numerous investment portfolios.

In an intriguing historical twist, the official announcement followed shortly after a false one. The SEC's Twitter account was compromised on Tuesday, featuring a fake tweet claiming the approval of a Bitcoin spot ETF. Despite the misinformation, the genuine approval was announced just a day later.

Undoubtedly, this is fantastic and welcome news!

How Will a Bitcoin ETF Benefit the Web3 Space?

Now that this has materialized, what does it mean for the crypto landscape? While the specific outcomes are challenging to predict, the overarching implication is that this represents a monumental stride toward the widespread adoption of Bitcoin.

The formal recognition of Bitcoin by the world's leading financial institutions imparts a heightened level of credibility to the entire Web3 ecosystem. This acknowledgment underscores the increasing acceptance and validation of Bitcoin within the global financial arena, solidifying its standing as a notable and legitimate asset.

From its inception, Bitcoin has primarily attracted a niche group of enthusiasts, including hackers, cryptographers, and libertarians. The emergence of a Bitcoin spot ETF, however, signals a broader interest and significance in digital assets. This development could pave the way for overcoming future regulatory challenges and may even set a precedent for the creation of spot ETFs for other crypto assets.

Looking at it from another perspective, a Bitcoin spot ETF signifies a substantial step in legitimizing Bitcoin, granting it unprecedented access to traditional financial markets. Investors can now gain exposure to Bitcoin through retirement vehicles such as a 401(k) or a standard brokerage account.