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Cryptocurrencies may have gotten boring, but they’re still not legal
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Roula Khalaf, editor of the FT, selects her favorite stories in this weekly newsletter.
It was easy to mock cryptocurrencies at the end of 2022. The market had collapsed by about two-thirds in the space of a year; many of the largest in the industry companies AND coins they had collapsed into oblivion, their flagrant practices exposed; and the bubble that increased revenue for pixelated images of monkeys (remember NFTs?) to be sold for millions of dollars burst. Longtime critics like me were encouraged to take virtual victory lapswhile the crypto crew clearly had egg all over their faces with laser eyes.
Just over a year later, however, making fun may seem less simple. Cryptocurrency prices have recovered significantly, with the market valuation nearly doubling over the past twelve months. Earlier this month, the U.S. Securities and Exchange Commission approved the listing of 11 spot bitcoin exchange traded funds (ETFs), offering investors exposure to the cryptocurrency through regulated products that can be bought and sold like stocks and are issued from some of the best -established asset managers. Meanwhile, Larry Fink, head of BlackRock, the world’s largest asset manager and one of those offering a bitcoin ETF, has become something of a bitcoin evangelist, calling him “an asset class that protects you”.
Is it time for people like me to admit we were wrong? Was the approval of ETFs a turning point? Cryptography is now kind of a domain. . . legitimate?
The hyperbole came thick and fast, certainly. “It’s not unreasonable to suggest that [the SEC’s approval] could be Wall Street’s biggest development in 30 years,” Michael Saylor, executive chairman of software company-turned-cryptocurrency accumulator MicroStrategy, he told Bloomberg.
“The significance of this moment cannot be overstated” he gushed Brad Garlinghouse, CEO of cryptocurrency firm Ripple on X. “Today’s news is further legitimization of cryptocurrencies as an asset class,” he wrote.
Yet despite these lofty proclamations, and the fact that this was heralded as a momentous event by both the crypto and mainstream press, what happened is downright boring. The only small glimmer of excitement came when the SEC’s Account X was compromised, meaning ETF approval was announced early. We didn’t suddenly discover the true identity of bitcoin’s pseudonymous creator, Satoshi Nakamoto. There is no new seeded asset class on offer that can create money out of thin air (before NFTs, you may remember ICOSTO and IEO).
No, all that has happened is that cryptocurrencies have gone from being an exciting and rebellious alternative to traditional finance, a way of “being your own bank”, to simply providing a means for regular investors to diversify their portfolios and to asset managers to make ends meet. a little extra income.
Cryptocurrencies in 2024 are, in other words, pretty boring. But boring doesn’t mean legitimate, as SEC Chairman Gary Gensler himself pointed out when the announcement was made. The Commission’s approval of bitcoin ETFs was not an endorsement of bitcoin or cryptocurrencies more broadly, but rather the result of a court ruling that found the SEC’s long-standing opposition to bitcoin ETFs bitcoin – on the grounds that it could be subject to fraud and manipulation – was arbitrary.
In a statement, Gensler stated that “while we are neutral on the merits, I would note that . . . bitcoin is primarily a speculative and volatile asset that is also used for illicit activities including ransomware, money laundering, sanctions evasion and terrorist financing.”
For context, some of the other SEC-approved ETFs include the “God Bless America” ETF (ticker: “$YALL”), an “anti-woke investment for God-fearing, flag-saving conservatives”; the “Inverse Cramer” ETF (SJIM) which seeks to invest in the opposite of what TV personality Jim Cramer recommends; and a “VICE” ETF (VICE) that invests in “vice-related businesses.”
Plus, it’s not like boring cryptocurrencies are all there is now. For anyone feeling deprived of the non-boring variety, there’s still plenty of it. For example, the online pastor accused of civil fraud earlier this month, after he and his wife created and sold a cryptocurrency to Christians, telling them that God told them directly that they would get rich if they bought it. He has since said it’s possible he “misunderstood God,” and also defended himself by saying that while it’s true he and his wife pocketed $1.3 million, some of it was spent on a “renovation of the house that the Lord told us to make.” .
The truth is, whether the cryptocurrency is wrapped up in a nice regulated box and sold by BlackRock, or you buy it from a pastor who says the Lord told him to make the sale, there is still nothing. So, even though it may be harder these days, I will continue to do what I consider God’s true work: get it off my chest.