The US Securities and Exchange Commission (SEC) has approved Bitcoin exchange-traded products (ETPs) after years of opposition – though not without stern warnings about the “myriad risks” of investing in the cryptocurrency. The news was enthusiastically welcomed by crypto-lovers and led to a slight increase in the value of Bitcoin, with the price of one Bitcoin being around $44,000 on January 8 and just over $47,000 at the time of writing.Thank you for reading this post, don't forget to subscribe!
The approval specifically pertains to 11 Spot Bitcoin ETPs, asset portfolios that can be purchased by anyone from ordinary investors to 401(k)s to pension plans. This is certainly a big push into the investing mainstream, and comes after the SEC resisted various previous attempts to sanction Bitcoin trades due to the potential for fraud and market manipulation. This has led to various court cases between the SEC and crypto firms, most of which have gone against the SEC, one particularly notable example being Last year’s win for Grayscale (a Bitcoin trading firm that wanted to offer an ETP) in which the decision described the SEC’s reasoning as arbitrary.
The SEC’s approval should therefore be viewed as a reluctance, and Along with this a statement was issued Does nothing to dispel that interpretation. SEC Chairman Gary Gensler said, “Although we are merit neutral, I would note that the underlying assets in metals ETPs have consumer and industrial uses,” while Bitcoin, in contrast, is primarily a speculative, volatile asset that can be used for illegal purposes. It is also done for. Activity including ransomware, money laundering, sanction evasion and terrorist financing.
“While we have approved the listing and trading of some spot Bitcoin ETP shares today, we have not approved or endorsed Bitcoin. Investors should remain vigilant about the myriad risks associated with Bitcoin and products whose value is tied to crypto. Has happened.”
ETPs are marketed as high-risk investments with the potential for big rewards, so this won’t surprise anyone. Spot Bitcoin ETPs will trade Bitcoin throughout its myriad price fluctuations, but investors are betting on the performance of an overall package (the ETPs themselves are traded on a stock exchange) that will include many other adjacent assets.
Perhaps most importantly for the average investor, none of this involves buying Bitcoins directly: so there is no dealing with myriad dubious crypto exchanges and no need for a crypto wallet.
This news was expected to send Bitcoin’s price soaring, however it was pre-announced due to the SEC accidentally announcing the news on X. Ahead of the official announcement on January 10, the SEC’s X account published a post announcing the news. January 9th at 4PM ET. Within 15 minutes it was removed and the chair Gary Gensler issues a comeback Claiming that the account was “compromised” and the tweet was “unauthorized” (hmm). Either way the cat was out of the bag.
Bitcoin’s current valuation of $47,200 is a long way from its all-time high in late 2021, when it peaked when the price of one Bitcoin was around $65,000, but that high was followed by a sharp decline in value in 2022 (at least $16,400) in what was generally a terrible year for crypto. Bitcoin remains the first and best-known cryptocurrency, and its performance is deeply tied to fluctuations in the broader industry (not least because many other crypto assets try to tie themselves to Bitcoin).
However, it is fair to say that we have come a long way from the ideals of Bitcoin’s unknown creator, Satoshi Nakamoto. Bitcoin was announced to the world in 2008 with a white paper that established the idea of a decentralized financial system where people dealt directly with each other without the need for intermediaries and financial institutions. That’s just not the case with companies like BlackRock wildly trading Bitcoin bundles on the US stock exchange.