As these applicants are fully prepared to offer these products, some spot Bitcoin ETFs will start trading on January 11, the next day of the approval. However, the decision was preceded by an event that stole the thunder of this momentous decision. Earlier in the day, SEC's X account was hacked, and fake information was posted saying the financial market regulator had approved Bitcoin ETF applications. The news pumped Bitcoin to nearly $48,000, which, after the SEC refuted the news, fell to $45,000 levels.

But what was refuted as fake news was accurate by the end of the day when the SEC approved these applications.

While the SEC statement does mention the risks of fraud, price manipulation, and high volatility associated with cryptocurrencies, including Bitcoin, its decision was prompted by an earlier court decision that had asked the SEC to review its rejection of Grayscale's application to convert its bitcoin trust fund into a bitcoin spot ETF. Grayscale had challenged the SEC rejection, claiming the regulator's approval of Bitcoin Futures ETF and the rejection of Bitcoin Spot ETF as discriminatory. The court sided with Grayscale and asked the SEC to have a fresh look at Grayscale's application.

At the root of the SEC's objection to a spot crypto ETF is its opinion that cryptocurrencies are unlike other financial products traded on the exchanges. A greater degree of risks are associated with them – from routine hacking and stealing of digital assets to price manipulation and rug pulls. The regulator can't expose investors to such a risky asset class. However, its approval of bitcoin futures ETF in 2021 stood in defiance of its opposition to Bitcoin Spot ETFs. Technically, the SEC has taken a step back, but it will likely be more vigilant and more virulent against digital assets and the newly approved Bitcoin ETFs. The regulator's stance is they have approved Bitcoin ETFs that the investors might like to explore; they haven't approved Bitcoin or any other cryptocurrencies.

After a two-year-long bear market, Bitcoin price started to soar early this year when traditional finance giant Black Rock filed a Bitcoin ETF application that tried to address the SEC's significant concerns around monitoring and reporting.

Soon, other applicants included these provisions in their applications, too. From that moment on, the Bitcoin price began to surge, rising from $20,000 to the current $47,000. When Bitcoin Futures ETF was introduced in October 2021 by ProShares, it saw a little shy of $1 billion invested in the newly minted fund within 24 hours. Bitcoin Spot ETF is expected to draw massive funds from investors, some pegging it to be over a trillion dollars. That would certainly change how the larger world, particularly the regulators, look at digital assets.

Their novelty, resilience, and defiance work in favour of Bitcoin and other digital assets. It's intangible, like the internet or email, but equally compelling. The regulators and the governments have not been able to control or manipulate it even though it's disrupting traditional banking and finance in no uncertain ways. Finally, despite all the disapprovals and rebukes, it's growing from strength to strength.

Given how India has dealt with this asset class so far, the US regulators' approval of spot bitcoin ETFs would leave Indian regulators and policymakers awkward. The road ahead doesn't promise them any face-saving moments either! To be fair to the regulators, they have a watertight case. They can't forego their responsibility of maintaining financial order and stability at the moment, no matter how history would judge them. That makes the story so much more interesting.

India's huge IT talent pool is already a factor to reckon with in the emerging global digital assets market. A few Indian blockchain projects with their crypto coins are on the list of top such products. Despite being far from an encouraging regulatory environment, industry surveys indicate India is leading in crypto adoption. The long and short of it is that India has missed the bus that Indians are driving! (IPA Service)