Bitcoin has been in the news quite a bit this week, which prompted a client to ask what the key developments were. Let’s take a look at what happened.

This week, the Securities and Exchange Commission (“SEC) approved the registration and trading of Bitcoin spot price Exchange Traded Funds (“ETFs”). Prior to this moment, investors wishing to invest in Bitcoin either had to own the physical tokens or utilize a handful of ETFs or invest in trust structures that held bitcoin, or utilize a handful of investments that invested in bitcoin futures contracts. These ETFs make it considerably easier for investors to gain direct exposure to the underlying price of the bitcoin itself.

(Note: ETFs are an investment vehicle where investors buy shares that represent a claim on the fund’s underlying assets. While most ETFs track equity (stock) indexes, others track bonds, commodities, and derivative products.)

These newly-approved ETFs are designed to track the spot price (price at which an asset can be bought or sold in market) of Bitcoin. Many are watching to see how closely the movements in the ETFs will mimic movements in the spot price of Bitcoin.

After the SEC’s approval, eleven Bitcoin ETFs were launched (including the conversion of the Grayscale Trust into an ETF) and a new ETF from Blackrock. On the first day of trading, over $4.6 billion of shares traded hands.

The SEC has rejected requests to approve these products in the past on investor protection concerns. Even with the approval now granted, Gary Gensler, Chairman of the SEC, was sure to say that the approvals were not an endorsement of bitcoin, staying in a statement ““Bitcoin is primarily a speculative, volatile asset that’s also used for illicit activity including ransomware, money laundering, sanction evasion and terrorist financing.”

The argument that certain bad actors are drawn to this space was reinforced by a hack of the SEC’s twitter account on Tuesday, releasing a message that the SEC had granted approval (before it actually had).

While it’s true these ETFs will make trading in and out of Bitcoin easier and more frictionless, that does not necessarily mean it is an appropriate investment for every investors. As with any investment, consult with your advisors prior to making any decisions concerning your finances.