On January 10, the SEC approved the creation of 11 spot exchange-traded funds (ETFs), an unprecedented move that allows cryptocurrency-backed ETFs to trade on public markets. Within 24 hours, Bitcoin ETF trading volume rose to $4.6 billion, and at one point the price of bitcoin surpassed $48,000. But the hype quickly faded: Bitcoin fell more than 8 percent two days after the historic SEC decision.
In a 3-2 vote, SEC commissioners approved the fake bitcoin ETFs after a federal court ruled last August that the SEC erred in Grayscale Investments' request to list a fictitious cryptocurrency ETF. Roxanne Islam, head of industry research at VettaFi, told the Observer that "a lot of this is already visible." “When Grayscale won its lawsuit against the SEC, we knew these mock Bitcoin ETFs would be approved.”
Bitcoin ETFs are controversial. Caroline Crenshaw, one of five commissioners at the Securities and Exchange Commission (SEC), criticized allegations of widespread fraud in the cryptocurrency ETF market in a scathing statement, citing an analysis of 157 cryptocurrency exchanges that found that "the 51 percent of daily Bitcoin trading volume reported fraud. However, SEC Commissioner Hester Pierce said in a confirming statement that “market manipulation is not unique to cryptocurrencies” and that the SEC “has tools to address issues as they arise." He has long argued that the SEC should treat cryptocurrencies the same as any other asset class: "Congress has not given people the authority to tell them whether a investment is appropriate for them."
Cryptocurrencies as a whole remain a controversial topic in the financial industry. In an interview at the World Economic Forum in Davos last week, JPMorgan Chase CEO Jamie Dimon reinforced his skepticism about the cryptocurrency and said he was not worried about the latest Bitcoin ETFs.
Other major players are more optimistic. On January 17, BlackRock's iShares Bitcoin ETF (IBIT) became the first to surpass $1 billion in assets under management in its first week of trading. Fidelity, Ark21, and Invesco are other big companies that have launched Bitcoin ETFs. BlackRock has seen more inflows than rival asset managers, thanks in part to a lower management fee of 0.2 percent (compared with Grayscale's 1.5 percent, for example) and greater name recognition. .
VettaFi's Islam sees the SEC approval as a major turning point for the cryptocurrency industry and hopes that the arrival of institutional investors will bring more stability to the cryptocurrency market. "We now have big names like Fidelity and BlackRock with these products, and that gives some relief to investors who might be nervous," he said.
It is difficult to predict the future impact of Bitcoin ETFs on the cryptocurrency market by looking at historical patterns. While gold ETFs generated similar enthusiasm when they launched in the early 2000s, Bitcoin has limited supply, higher volatility, and less control over the underlying asset.
Bitcoin ETFs may disrupt major cryptocurrency exchanges in the near future. For example, Coinbase's margins and trading volume are threatened due to the low cost and easy access of Bitcoin ETFs, Reuters reported last week, as clients no longer need to create a digital wallet on Coinbase or similar platforms. to access cryptocurrency. not buying
It is also unclear what future regulation of the cryptocurrency market can be expected from the SEC. Commissioner Pearce told the Observer that the agency hopes to be able to "change course" from its current direction of "one market in the US and one in the world" due to our lack of regulatory clarity.
However, not all members of the Securities and Exchange Commission agree. In a statement regarding the approval of the Bitcoin ETF, SEC Chairman Gary Gensler said the agency "does not approve or disapprove of Bitcoin" and "does not reflect the Commission's views on the status of other crypto assets."
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Read original What do Bitcoin ETFs mean for the future of cryptocurrencies? Regulators and investors also weigh in with Shreyas Sinha in the Observer.