SEC Approves 11 Bitcoin Spot ETFs
SEC reluctantly approves 11 Bitcoin spot ETFs after months of sustained pressure.
After a long battle — and a major announcement snafu — the SEC has formally approved 11 Bitcoin spot ETFs for retail investors.
The campaign for US regulators to approve a spot ETF tied to the valuation of bitcoin has been going on for many months now, and the immense opportunities a success might create have been obvious. An ETF, or exchange-traded fund, is a commonly used financial instrument that ties its valuation directly to an exterior product, such as a commodity or stock valuation. The futures ETF, which already exists and is quite popular, assesses its value from a number of indirect measures that generally approximate bitcoin’s financial wellbeing. The spot ETF, however, would have a direct correlation.
The main opportunity that opens up from such an approval is the massive normalization and popularization of bitcoin as a profitable investment. Anyone who invested in the ETF would not hold any bitcoin, have no ability to spend it or interact with the various applications that facilitate its use, and are truly unconnected from actual Bitcoin holders. In other words, even a massive success would not directly impact the asset’s adoption as a real currency, let alone the long-term goal of hyperbitcoinization. Nevertheless, ETFs are so thoroughly-integrated into the financial mainstream that people would invest in it without even knowing. Mutual funds, pensions, etc., all buy popular ETFs from a variety of sources, and that would give untold millions of people skin in the game. This can presumably only benefit bitcoin’s rise in the popular imagination and people’s pocketbooks.
In fact, the countless examples of hype surrounding the prospect of a successful ETF have been a major factor in bitcoin’s success in the past several months. Case in point: On the day of the SEC’s deadline to approve or reject a series of prominent ETF applications, a prominent hoax wrought havoc on the market literally within seconds. The SEC’s Twitter account posted a message that the Commission had finally issued its approval, and its chair Gary Gensler quickly claimed that the account was hacked. The FBI has already begun investigating the culprit in this hack, and the whole episode prompted one online analyst, The Rational Root, to quip that “I don’t post a 1-minute chart often.”
Clearly, the subject has been a real live wire, dominating Bitcoin’s news cycle for days. ETF hype was able to captivate the entire space to the degree that pillars of the financial establishment also saw a foregone conclusion. The Chicago Board Options Exchange, the largest options exchange in the US, actually preempted an SEC decision when it declared that the ETFs would go live for sale the following day, several hours before such a sale was actually legal. With pillars of the financial establishment behaving in this manner, it became clear to everyone that an approval was a foregone conclusion.
Even so, it came as a major relief when the SEC formally approved the 11 applications in a true watershed moment for the Bitcoin community. Considering that the actual ETFs cannot go for sale from major institutions until the following morning, the immediate jump in bitcoin’s price has been noteworthy but far from astronomical. So now, the community is left to wonder, what’s next? For some players like Coinbase, one of the industry’s leading exchanges, derivatives like futures and the spot ETF represent a real future. It has already begun a pivot towards the sale of derivatives worldwide, building the infrastructure for future sales in the European Union where ETFs have not yet been legalized. As CNBC reported, Coinbase claimed that “derivatives make up 75% of overall crypto trading volumes.” There’s no way to pass up an opportunity like that.
It’s not enough that some of the big players see huge new revenue streams in the United States, but some of the savvy ones like Coinbase are even laying the groundwork for the same streams to turn from a trickle to a deluge in other countries. Perhaps it’s likely that the tale of a formerly hostile establishment welcoming Bitcoin into the fold will cause regulators overseas to sing the same tune. Or perhaps the potential payouts are so huge that it would be practically criminal to not invest beforehand. Whatever may happen, this new economic landscape for Bitcoin has left people looking towards the future.
Of course, the prospect of a now-realized Bitcoin spot ETF has also had its critics. Is it really such a good thing that a radical new vision for economic freedom, a currency that wishes to replace the dollar, has found such a cozy new place in the financial establishment? How can the ETF help hyperbitcoinization, when ETF investors can be said in no way, shape or form to actually hold any bitcoin? It may come to pass that the actual base of developers and Bitcoin users gets overwhelmed with a new influx of capital from totally disinterested parties. Or worse, what if the ETF doesn’t change anything? Bitcoin’s valuation has soared on the wings of ETF hype for months, how will the markets react if we were excited over nothing? If the proposals were rejected, we could at least fight on, but the whole market might deflate if our hopes end up sagging.
Although it’s too soon to say what the long-term implications will be, no one can argue that the immediate reaction from all corners of the community has been one of jubilation. SEC Chair Gary Gensler even stated that he issued this approval with the greatest reluctance, calling bitcoin “primarily a speculative, volatile asset that’s also used for illicit activity including ransomware, money laundering, sanction evasion and terrorist financing.” But the pressure against this backwards viewpoint was simply too powerful. With such a spirited campaign winning consistent victories against the SEC in court, there was no actual way that unelected regulators could block this hurricane of support. Bitcoin won today, and no small victory at that.
Whatever happens, it’s important for Bitcoiners to remember our power in the wake of these events. Even if some of the hypothesized negative possibilities from a Bitcoin ETF do come to pass, we will still have that power. It’ll be impossible for all the billions from institutional finance to simply overpower the community, they have already tried on many occasions. We can consider this new world of possibilities a testament to the enduring power of Bitcoin, and an inspiration to win even bigger futures. After coming as far as it has, why wouldn’t bitcoin go to the moon?
 |
|