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It was easy to mock cryptocurrencies in late 2022. The market fell by nearly two-thirds in the space of one year; Many of the biggest companies and coins in the industry have collapsed into oblivion, their blatant practices exposed; The bubble has burst that prompted receipts of pixelated images of monkeys (remember NFTs?) to sell for millions of dollars. Longtime pundits like me were encouraged to go on virtual victory laps, while the crypto crew had eggs, obviously, all over their laser-eyed faces.
However, just over a year later, the cynicism may seem less obvious. Cryptocurrency prices have rebounded significantly, with the market value nearly doubling over the past 12 months. Earlier this month, the US Securities and Exchange Commission approved the listing of 11 Bitcoin exchange-traded funds (ETFs), giving investors exposure to the cryptocurrency through regulated products that can be bought and sold like stocks, and are issued by some of the… Best boxes. – Establishment of asset managers. Meanwhile, Larry Fink, the head of BlackRock, the world's largest asset manager and one of the companies that offers bitcoin ETFs, has become a bitcoin evangelist, calling it “an asset class that protects you.”
Is it time for people like me to admit that we are wrong? Was the approval of ETFs a game changer? Is encryption now a type of . . . legal?
The hype has certainly come thick and fast. “It is not unreasonable to suggest that [the SEC’s approval] “This could be the biggest development on Wall Street in 30 years,” Michael Saylor, CEO of software company-turned-cryptocurrency hoarding MicroStrategy, told Bloomberg.
“The importance of this moment cannot be overstated.” I gushed “Today’s news is further legitimacy for cryptocurrencies as an asset class,” wrote Brad Garlinghouse, CEO of cryptocurrency company Ripple on X.
But despite these lofty statements, and the fact that this was a historic event by both crypto and the mainstream press, what happened was downright boring. The only glimmer of excitement came when the SEC's X account was hacked, meaning the approval of ETFs was announced early. We haven't suddenly discovered the true identity of Bitcoin's pseudonymous creator, Satoshi Nakamoto. There is no new initial asset class on offer that can extract money from nothing (before NFTs, you may remember ICOs, STOs, and IEOs).
No, all that's happened is that cryptocurrencies have gone from being an exciting and rebellious alternative to traditional finance, and a way to “be your own bank”, to simply providing a way for everyday investors to diversify their portfolios and for asset managers to make money. A little extra revenue.
In other words, cryptocurrencies in 2024 will be rather boring. But boring does not equal legitimacy, as SEC Chairman Gary Gensler himself pointed out when the announcement was made. The SEC's approval of Bitcoin ETFs was not an endorsement of Bitcoin or cryptocurrencies more broadly, but rather was the result of a court ruling that found the SEC's longstanding opposition to Bitcoin ETFs — on the grounds that they might be vulnerable to fraud and manipulation — was arbitrary.
In a statement, Gensler said: “Although we are neutral, I would like to point out 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 other ETFs that have been approved by the SEC include the “God Bless America” ETF (ticker: “$YALL”), which is “an anti-woke investment for God-fearing conservatives who save science.” ; the Inverse Cramer ETF (SJIM), which aims to invest in the opposite of what TV personality Jim Cramer recommends; and the VICE ETF (VICE), which invests in “vice-related businesses.”
Plus, it's not as if boring cryptocurrencies are all there is right now. For anyone who feels deprived of non-boring variety, there's still plenty of that. For example, an online pastor was charged with civil fraud earlier this month after he and his wife created and sold cryptocurrency to Christians, telling them that God told him directly that they would get rich if they bought it. He has since said it is possible he “got the Lord wrong,” and also defended himself by saying that although he and his wife received $1.3 million, some of that was spent on “renovating the house that the Lord asked us to do.” .
The truth is, whether your cryptocurrency is wrapped in a nice regulated wrapper and sold to you by BlackRock, or whether you buy it from a pastor who says God told him to make the sale, there is still no problem. there there. So, even though it may be more difficult these days, I will continue to do what I consider to be God's true work: taking the mickey out of it.
jemima.kelly@ft.com
