Bitcoin ETFs approved in the US, but will the UK follow?

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The Securities and Exchange Commission (SEC) has approved the sale of spot Bitcoin ETFs in the US.

Crypto enthusiasts across the world have welcomed the news that after years of rebuffs, the US regulatory body, the SEC, has given the green light for spot Bitcoin ETFs to be sold.

However, the UK’s Financial Conduct Authority (FCA) seems to have no plans to follow suit – UK crypto investors will need to continue to watch from the sidelines for the moment.

What is a spot Bitcoin ETF?

An exchange traded fund (ETF) is an easy way to invest in an asset or a group of assets, without having to directly buy the asset itself. The value depends on how the overall portfolio performs in real time.

Some ETFs may already indirectly contain Bitcoin. But a spot Bitcoin ETF will buy the cryptocurrency directly, at its current price, and allow investors to gain exposure to Bitcoin without actually owning the cryptocurrency.

Can UK investors buy Bitcoin ETFs?

The FCA has banned access to crypto ETFs for UK retail investors, so UK investors aren’t able to buy them currently.

The UK regulator is taking a cautious approach to cryptocurrency. New rules which came into force in October 2023 categorised Bitcoin and other cryptocurrencies as “restricted mass market investments”.

It’s therefore unlikely we will see the UK follow the US’s lead and make Bitcoin EFTs available.

The regulator has repeatedly flagged concerns about the extreme volatility of crypto and the difficulties retail investors face in valuing them. With its latest regulations, it’s clear this opinion remains unchanged.

What does this mean for the price of Bitcoin?

After several years of turmoil, Bitcoin’s price saw an uplift on the back of the SEC’s announcement, peaking at $49,000 (around £38,400).

The approval of Bitcoin ETFs will give investors more options globally, potentially driving up demand for the cryptocurrency. Some analysts have even said it could stabilise the price as it broadens the cryptocurrency’s use and potential audience.

However, as the price of Bitcoin rises, some investors could decide to cash out, affecting the price.

Bitcoin is famous for its price volatility and there seems to be no change to that at present.

*Cryptocurrencies aren't regulated in the UK and there's no protection from the Financial Ombudsman or the Financial Services Compensation Scheme. Your capital is at risk. Capital gains tax on profits may apply.

Cryptocurrencies are speculative and investing in them involves significant risks - they're highly volatile, vulnerable to hacking and sensitive to secondary activity. The value of investments can fall as well as rise and you may get back less than you invested. Past performance is no guarantee of future results. This content shouldn't be interpreted as a recommendation to invest. Before you invest, you should get advice and decide whether the potential return outweighs the risks. Finder, or the author, may have holdings in the cryptocurrencies discussed.

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