In Wake of ETF Approval, Bitcoin Worldwide Matures

After the Bitcoin ETF won approval in the United States, worldwide governments have made major moves for their own digital asset policies.

Now that Bitcoin has placed a new feather in its cap for relations with the United States government and their financial regulatory regime with the ETF approval, countries on every continent are seeking new ways to define their relationship to Bitcoin’s rising star.

The Securities and Exchange Commission in the US finally resolved a protracted battle with Bitcoiners when it approved 11 Spot ETFs on January 10.  Although the actual launch of the ETF has been somewhat messy for bitcoin, from a price standpoint, it still nevertheless represents an unreserved triumph. The days when federal regulators treated Bitcoin with disdain and suspicion are now over: Even if regulators do scoff at what they see as a risky asset, Bitcoin is too strong for anyone to look down at it. Bitcoin is accepted in the financial infrastructure of its presumed country of origin, and it’s a move that’s only been possible with strong and long-lasting support.

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Much ink has been spilled about the impact of the ETF on the US market, but Bitcoin is a worldwide movement. The sustained and dramatic growth in bitcoin’s valuation throughout much of 2023 was a consequence of the ETF campaign gaining steam, and that hype has been felt worldwide. Even if Bitcoiners in Hong Kong or Nigeria may not be able to invest in the ETF, they certainly have noticed the ETF’s ability to pump up bitcoin in their own countries. One particular beneficiary of this worldwide bonanza has been El Salvador, which made history in 2021 by choosing to adopt bitcoin as a new legal tender. Although this move was initially lambasted, the nation’s material investments in bitcoin have made a solid profit by January 2024. El Salvador has chosen to double down and then double down again as far as the world’s leading digital currency is concerned, and this boom cycle is no different: Within the last month, it has already made the groundbreaking pledge to offer citizenship to foreign bitcoin investors. 

The bet paid off for El Salvador, and the nation has no signs of stopping. Moves like this offer of citizenship work to build bridges in the sphere of business, but the government has also been working on its political relationships vis-a-vis Bitcoin. After libertarian ideologue Javier Milei was elected the new president of Argentina, El Salvador immediately assembled diplomatic efforts to encourage the new president’s nascent interest in Bitcoin. 

International outreach has apparently borne fruit, as Milei’s executive orders have led to a new worldwide milestone in Argentina: the first rental agreement explicitly stipulating that the tenant must pay in bitcoin. Milei’s belief in the free market has enabled Argentine citizens to actually make this agreement legally binding, and it’s no accident that he left a specific holdout for bitcoin. Milei is further scheduled to make a keynote address to the World Economic Forum in Davos, espousing his belief in the “Freedom to Transact” and arguing that vendors and customers should have the power to choose bitcoin for their dealings. 

Latin America has seen these two major successes in the world of Bitcoin, but other digital assets have seen less success. In Venezuela, the government made worldwide headlines in 2018 when it became one of the earliest adopters of a state-backed cryptocurrency. Dubbing this creation the “Petro,” Venezuela sought to ensure its value by tying it to the value of the nation’s oil reserves. But now, with Bitcoin seeing a real moment in the sun, Venezuelan crypto enthusiasts have reported that Petro is on the brink of collapse. According to the group Asonacrip, the government is preparing to liquidate all Petro in circulation, replacing them with Venezuela’s fiat currency. Asonacrip went on to urge Petro holders to make the switch to bitcoin.

Petro was a breakthrough in the sphere of state-backed digital assets due to its official adoption, but its decision to have its price totally unrelated to the state’s own fiat currency may have proved its undoing. In the intervening years, worldwide governments have chosen a different path: making a digital version of their regular currency. China has seen their digital yuan reach a new phase of international commerce, and the European Central Bank earmarked more than $1.3 billion towards the development of a digital euro one day after the ETF approval. Although the European Union has been generally planning to make a digital currency for several years now, this massive investment directly after the ETF’s approval seems significant. Jonas Gross, chairman of the Digital Euro Association, claimed that he was first shocked by the amount of money, but went on to state that “it's a contract that goes for a few years, where the ECB really expect the partners to deliver a product that’s … really kind of perfect to be implemented on the market.” The business community, for its part, is already anticipating similar regulatory approvals to the Bitcoin ETF to take place in Europe. 

The decision to go forward with a state-backed digital asset is certainly a controversial one, especially when Bitcoin remains in the spotlight. There are no shortage of stablecoins pegged to various fiat currencies without the backing of their governments, and the success of these projects can vary wildly: Circle’sUSDC, a stablecoin based on the dollar, has seen trillions of dollars worth of remittances, while the United Nations has identified another — USDT —  as a major choice for international fraud. A possible standout in the field of state digital assets might be the Republic of India, which established its digital rupee in December 2022. One year later, the country saw the beginning of an interesting new form of protectionism, as the government opened a salvo against nine major international exchanges. Specifically naming such leaders as Binance, Huobi, Kraken and Bitfinex, the government claimed that these exchanges would be outlawed from the country over issues of noncompliance. 

This announcement was made in December, but the ban was actually put into effect on January 14, again after the ETF battle reached a climax in the US. This ban was immediately turned into an opportunity by exchanges based in India, which have been offering lucrative deals to try and poach the banned exchanges’ consumer base. One leader, CoinDCX, even set aside a fund of $1 million to help new users transfer their assets off of banned foreign platforms. Clearly, the government sees the massive revenue that these foreign exchanges are making, and wishes to give its own digital asset community the chance to profit. Indeed, this puts India in a very interesting position, as it wishes to promote a national asset and domestic businesses, but doesn’t have any particular desire to expel Bitcoin itself. Quite the opposite, many of these Indian crypto leaders have expressed a great willingness to continue their trade in bitcoin. For example, Rajagopal Menon, VP at Indian crypto exchange WazirX claimed that the ETF “has lifted the spirits of the market” and looks forward to a “steady flow of institutional funds into the crypto industry.”

Even when the focus is not on bitcoin itself, new developments in the world surrounding Bitcoin can truly resound everywhere. The nations surveyed here have displayed a wide variety of reactions to the Bitcoin ETF news, often without directly supporting Bitcoin like Argentina or El Salvador have. The European Union has been planning their digital asset for years, yet only pulled the trigger on massive investment in the wake of US regulatory approval. Similarly, India had already announced this attack on foreign exchanges, but its beneficiaries are looking forward to new opportunities from the Bitcoin ETF. India even has a digital currency of its own, but it has seen very little attention in any of these developments.

Bitcoin has the potential to bring economic prosperity to people around the globe, regardless of their feelings on the subject. A rising tide lifts all boats, and the US Bitcoin community has been churning up a real tsunami. It will be interesting to see how all these projects and more progress in the wake of the Bitcoin ETF, but it seems clear that a splash this big will be felt for quite a long time.