Bitcoin: Crypto fans can now invest in exchange-traded funds – but what are they?

The US has made the long-awaited decision to allow Bitcoin to be part of mainstream investing funds.

It has approved what are known as spot Bitcoin exchange-traded funds (ETFs), which can be purchased by anyone from pension funds to ordinary investors.

The announcement from the head of the Securities and Exchange Commission was accompanied by a stern warning about risks associated with the asset.

But cryptocurrency fans reacted with glee – and memes about becoming rich.

The US financial watchdog had repeatedly rebuffed earlier requests for approvals, citing concerns about potential for fraud and manipulation.

But a US court said last year its justification was inadequate.

The go-ahead comes after a false start on Tuesday, when the regulator had to rapidly withdraw an “unauthorised” post announcing the decision early.

SEC chairman Gary Gensler said on Wednesday that investors should not mistake the new approvals for an endorsement of the cryptocurrency.

“Bitcoin is primarily a speculative, volatile asset that’s also used for illicit activity including ransomware, money laundering, sanction evasion, and terrorist financing,” he said.

“Investors should remain cautious about the myriad risks associated with bitcoin and products whose value is tied to crypto.”

But what is an ETF?

ETFs are portfolios that allow investors to bet on multiple assets, without having to buy any themselves.