Ark Invest CEO Cathie Wood Reacts to Hacker Posting Approval for Bitcoin Spot ETFs on 'The Claman Countdown'.
Finally they did it.
The Securities and Exchange Commission has paved the way for retail investors to gain access to the world's largest digital asset, Bitcoin, by approving the first U.S. sale and distribution of 11 exchange-traded funds that will track daily price or "spot" of the asset. .
STATEMENT BY SEC CHAIRMAN GENSLER ON BITCOIN SPOT ETFS
Late Wednesday afternoon, following a series of embarrassing technical errors and a hack of the SEC's social media account, the Commission voted 3-2 to give the green light to ETFs.
Until now, small investors who wanted to trade digital assets had to buy and sell them on unregulated crypto exchanges and, in some cases, fell victim to scams and frauds. The most notable example is the $8 billion in client funds embezzled by convicted former cryptocurrency kingpin Sam Bankman-Fried at his now-defunct FTX exchange.
The U.S. Securities and Exchange Commission (SEC) said on Friday it would delay applying to certain assets a new disclosure rule for over-the-counter securities until Jan. 3, 2022. Photographer: Andrew Harrer/Bloomberg via Getty Images (Photographer: Andrew Harrer/Bloomberg/Getty Images)
Starting Thursday, ETFs that track the daily or spot price of Bitcoin will begin trading on the Nasdaq, the New York Stock Exchange and the CBOE, a key marker in the maturation and integration of the $1.7 trillion crypto market. . Investors can purchase ETFs through some of the country's most venerable asset managers, such as BlackRock, Fidelity, and Grayscale (which specializes in digital assets) and trade on the world's most regulated stock exchanges.
SEC CHEATED, X ACCOUNT HACKED, SPOT BITCOIN ETFS NOT APPROVED
In 2021, the SEC approved the sale of a Bitcoin ETF that tracks the futures market. The key difference is that futures products can only be sold to accredited investors, or those considered "sophisticated" and have high net worth.
The new Bitcoin spot ETFs can be sold to any investor. They can be purchased through brokers or on a discount brokerage app, meaning potentially millions of new investors could soon own a piece of the cryptocurrency business.
"I am celebrating the right of American investors to express his thoughts on bitcoin buying and selling spot bitcoin ETPs," said SEC Commissioner Hester Peirce. "And I'm celebrating the perseverance of market participants in trying to bring to market a product that they believe investors want."
Peirce was one of three commissioners who voted to approve the ETFs.
The crypto industry's journey to this point has not been easy. Regulatory oversight of digital assets has been complicated since the SEC began trying to regulate them in 2017, when former SEC Chairman Jay Clayton filed enforcement actions against several companies such as Telegram and Kik for holding so-called initial coin offerings. (ICO) not registered.
One of Clayton's first acts as president was to reject an application from the founders of crypto exchange Gemini, the Winklevoss brothers, for a Bitcoin spot ETF that he had applied for in 2013. The reason for the SEC's rejection was due to the fact that The digital asset market was not yet mature enough. The agency again rejected Gemini's request in 2018, citing that the exchanges lacked internal controls to prevent market manipulation.
His last act as head of the SEC was to file suit against cross-border payments company Ripple for selling the XRP token to fund its platform, alleging that doing so without first registering the token sales with the commission constituted a violation of values.
However, courts have looked askance at the SEC's attempts to bring the cryptocurrency market into compliance in recent months, given the regulatory gray area around digital currencies. Ripple spent around $200 million fighting the SEC action. In July, it won a mixed victory after three years in court when a US district judge ruled that the company's sales of XRP to institutional investors, such as banks, did indeed violate securities laws, as claimed by the SEC, but its sales to the secondary market investors on crypto exchanges did not.
LIVE CRYPTOCURRENCY PRICES: HERE
The SEC has said it plans to appeal the ruling.
The seal of the U.S. Securities and Exchange Commission is displayed on a smartphone, with Bitcoin visible on the screen in the background, in this photo illustration taken in Brussels, Belgium, January 9, 2024. (Photo Illustration by Jonathan Raa/NurPhoto via Getty Images/Getty Images)
Current SEC Chairman Gary Gensler, a Biden appointee, has been even tougher on the crypto industry than his predecessor, filing more than two dozen enforcement actions against it in 2023 alone. Some of those actions included sue major exchanges like Coinbase and Binance, which plan to follow Ripple's lead and fight the SEC in court, hoping that the agency's losing streak will increase its chances of victory.
According to experts, one legal loss in particular paved the way for the Commission's approval of Bitcoin Spot ETFs. Grayscale's August 2023 victory over the SEC when a DC appeals court ruled that the agency could not outright deny the company's request to convert its Bitcoin Trust product into a spot ETF.
The judicial panel ruled that the SEC should take a closer look at the application, which was the signal many potential ETF issuers were waiting for.
Bitcoin ETF applications arrived over the summer from major asset managers like BlackRock and Fidelity, along with other crypto outfits. Cathie Wood's Ark21Shares and crypto index fund manager Bitwise had already filed their applications earlier in the year. By the end of 2023, the total number of applicants had increased to thirteen.
DUBAI, UNITED ARAB EMIRATES - DECEMBER 4: Larry Fink, CEO of Blackrock, attends a panel discussion titled: "Financing the New Climate Economy," during which he outlined the urgent need for a "new financial landscape" to finance investments in (Sean Gallup/Getty Images/Getty Images)
BlackRock CEO Larry Fink, once a bitcoin bear, told FOX Business in July that he now sees Bitcoin as a store of value and an international asset. Wall Street's change in tone, coupled with pressure from the courts and support from someone with Fink's gravitas (he runs the world's largest money manager) made approval of a Bitcoin spot product a question. of "if", instead of 'when'.
THE BITCOIN REBOUND IN THE FIRST INTRIES
Securities lawyers say Gensler's distaste for the asset class was evident by the way the agency mandated that the ETFs be structured (cash only), meaning investors can only buy and redeem shares of the ETF. using cash, not bitcoin. This is a departure from most traditional commodity-based ETFs that allow their clients to purchase shares using the underlying asset.
The SEC remains concerned that the cryptocurrency market is largely unregulated and susceptible to bad actors with malicious intent.
In approving ETFs, the SEC weighed those factors, FOX Business has learned, although it recently concluded that allowing investors to trade bitcoin in the form of securities on highly regulated exchanges is better than having small investors trade digital currencies through opaque media. as has been the norm.
Adding to the many hurdles the industry cleared before Wednesday's approval was a series of mistakes by the SEC itself, including a hack of the agency's official X (formerly Twitter) account on Tuesday, falsely announcing that ETFs They were ready to start trading.
A representation of bitcoin is seen in an illustrative photograph taken on June 23, 2017. (Benoit Tessier/File photo/Reuters Photos)
On Tuesday night, the price of Bitcoin jumped nearly $48,000 on fake news before the SEC regained control of his account and Gensler had to retract the statement using his personal account X, informing the bewildered market that the account of his agency had been compromised. The SEC announced Wednesday that it would launch an investigation into the matter with the help of the FBI and the Office of Inspector General.
The price of Bitcoin suffered a small drop after Gensler's clarification and remained trading around $45,000 on Wednesday. Following the approval of the ETF, the digital asset is trading relatively stable at $46,500.
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The mysterious circumstances and unprecedented nature of the SEC hack lead many industry observers to believe that the SEC would further delay approval beyond the January 10 deadline. Minutes before the close of trading on Wednesday, the SEC bungled again when it prematurely released the issuer's Form 19b-4 approvals, only to remove them again before making its official announcement after the 4:00 closing bell. p.m
