Federal Regulators Greenlight Trading of Bitcoin-Linked Securities, Delighting Investors and Infuriating Cryptocurrency Critics
Federal regulators are allowing new bitcoin-tied securities onto the market, marking a major milestone for the cryptocurrency industry. On Tuesday, the ProShares Bitcoin Strategy Exchange-Traded Fund (ETF) started trading on the New York Stock Exchange.
The launch of this new fund—which will allow investors to purchase a package of bitcoin futures contracts—saw the price of the cryptocurrency rise 4 percent to a near all-time high of $64,000. Cryptocurrency news site Decrypt reports that five other Bitcoin ETFs have applications pending with the SEC. Provided the agency doesn’t explicitly reject them, all of them could be trading by early November.
Longtime bitcoin boosters described the launch of the first bitcoin ETF as an unqualified success that only portends bigger and better things for the digital currency.
“The ETF approval is a watershed moment for the industry,” said Brock Pierce, of the semi-defunct Bitcoin Foundation, in a statement to CNN Business. “Today begins an era…and serves as further validation of Bitcoin and cryptocurrencies across the country and on a global basis.”
Other cryptocurrency investors were a little more measured in their reactions.
Bitcoin’s rise to close to its record price is “related to the growing belief as the trading day goes on that this is going to be considered a successful launch,” said Stephane Ouellette of FRNT Financial Inc., a crypto-focused capital-markets platform, to Bloomberg. “Given the amount of avenues retail investors already have to participate in BTC, clearly the U.S.-based ETFs are nonetheless satisfying some kind of latent, even if niche, demand.”
Others were far less excited about the launch. SEC Chair Gary Gensler, a Biden appointee and bitcoin critic, cautioned investors on CNBC that cryptocurrency was “still highly speculative asset class” and that the new ETF “still has that same aspect of volatility and speculation.”
Some progressive groups, meanwhile, are fuming that Gensler allowed the Proshares ETF at all.
“Bitcoin and other cryptocurrencies have already sucked an insane amount of money from the real economy,” Bart Naylor, financial policy advocate at the consumer group Public Citizen told Politico. “Enabling more gambling under the banner of the SEC debases what’s supposed to be the gold standard of world securities markets oversight.”
These dueling reactions highlight the awkward position bitcoin finds itself in at the present moment. Its wider acceptance among institutional investors and individuals alike is also fueling demands for tougher, tighter regulation.
Sen. Elizabeth Warren (D–Mass.) had characteristically demanded that the SEC “step up to address [cryptocurrency’s] regulatory gap.”
Some Republicans, meanwhile, are positioning themselves as defenders of Bitcoin. Sen. Cynthia Lummis (R–Wyo.) told Reason earlier this year that “it provides great freedom to people who
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