Bitcoin ETF: news, UK share prices in pounds, SEC crypto approval explained, what is it, future - and meaning

The US Securities and Exchange Commission (SEC) has reluctantly approved the trading of the first bitcoin exchange-traded funds (ETFs), but stated in its ruling that it "did not approve or endorse bitcoin" and that it remains extremely sceptical of cryptocurrencies.

The "watershed" regulatory greenlight has been anticipated for several months and the price of bitcoin has jumped about 70%, with the cryptocurrency trading at $45,890 (£36,024) on Wednesday 10 January, up from about $27,000 (£21,000) in mid-October.

But what does it mean for cryptocurrency, and should somebody who knows nothing about bitcoin be intrigued? Here is everything you need to know about it.

What is an exchange-traded fund?

An exchange traded fund, or ETF, is an easy way to invest in something or a group of things, like gold, junk bonds or bitcoins, without having to buy the things themselves.

An ETF essentially tracks the price of an asset, in this case bitcoin, allowing investors to bet on bitcoin without actually owning the cryptocurrency themselves. This essentially allows them to invest in bitcoin like it was a regular stock.

What does it mean for me?

Cryptocurrency advocates hope the development thrusts the once niche and nerdy corner of the internet even further into the financial mainstream.

Thanks to the SEC's approval of 11 ETFs for the cryptocurrency in the US, many new investors who don't want to go through the extra steps involved in purchasing actual bitcoin now have access to cryptocurrencies.

Previously, in order to obtain bitcoin, a person would have to either create a digital wallet or register for an account on a cryptocurrency trading website like Binance, Coinbase - or FTX, which collapsed last year.

Last month, FTX's founder Sam Bankman-Fried was found guilty of fraud - he is yet to be sentenced.

Are they safe?

The SEC stated that even after approving the new ETFs, it remained extremely dubious about cryptocurrencies, and that its ruling did not imply that it supports or condones bitcoin.

“Investors should remain cautious about the myriad risks associated with bitcoin and products whose value is tied to crypto,” said Gary Gensler, the agency’s chairman.

In a bizarre turn of events that perhaps highlights the volatile nature of cryptocurrencies and the culture that surrounds them, an "unapproved" announcement of ETFs' approval was made ahead of time after the SEC's X account was hacked.

The price of bitcoin briefly spiked more than 1,000 US dollars after the post on X, formerly known as Twitter, claimed “The SEC grants approval for #Bitcoin ETFs for listing on all registered national securities exchanges.”

But soon after the initial post appeared, Gensler said on his personal account that the SEC’s account was compromised and, “The SEC has not approved the listing and trading of spot bitcoin exchange-traded products”.

It was unclear exactly how the SEC’s social media account was hacked. X’s @Safety account tweeted on Tuesday (9 January) night that a preliminary investigation by the platform determined “an unidentified individual” got control of a phone number associated with the account “through a third party”.

Of course, cryptocurrencies like Bitcoin also impact the environment through energy consumption, as the process of validating transactions and creating new coins, known as mining, requires powerful, energy-intensive computers to solve complex mathematical problems.

How will it affect the price of bitcoin?

As mentioned, the regulatory greenlight has been anticipated for several months and the price of bitcoin has jumped about 70%, with the cryptocurrency trading at $45,890 (£36,024) on Wednesday 10 January, up from about $27,000 (£21,000) in mid-October.

This week, analysts at Standard Chartered predicted that the ETFs might attract $50 billion to $100 billion just this year, which might push the price of bitcoin to $100,000 (£78,452).

Other more cautious forecasts suggest that since ETFs may expand cryptocurrencies' potential audiences and uses, they may actually contribute to the stabilisation of prices.