The cryptocurrency market has seen a significant recovery over the past year, regaining much of the value it lost during 2022’s major crash. With the U.S. Securities and Exchange Commission’s recent approval of several spot bitcoin exchange-traded funds (ETFs), crypto seems to be gaining mainstream acceptance as an asset class, according to FT.
Major players like BlackRock are now offering crypto ETFs, allowing mainstream investors easy access. However, SEC Chair Gary Gensler quickly pointed out that the approval did not represent an endorsement of cryptocurrencies. While crypto may become more boring and integrated into traditional finance, risks like volatility and fraud remain. Crypto critics would be unwise to declare premature victory.
The total value of the crypto market has nearly doubled over the past 12 months following 2022’s massive price collapse. Leading coins like Bitcoin have regained significant ground. With major traditional financial players like BlackRock and asset managers offering crypto ETFs, cryptocurrency now features in mainstream investment portfolios as a tool for diversification.
Prominent crypto executives have hailed the SEC’s ETF approvals as legitimizing digital assets. Ripple CEO Brad Garlinghouse called it a “further legitimisation of crypto as an asset class.” Bitcoin bull Michael Saylor claimed the move could be “the biggest development on Wall Street in 30 years.”
Regulatory Winds And Cryptocurrency Realities
However, SEC Chair Gary Gensler noted that the approval did not represent an endorsement of cryptocurrencies. Rather, it resulted from a court ruling that found the SEC’s past opposition to crypto ETFs was arbitrary. Gensler reiterated concerns about crypto’s volatility and use in illicit financing.
Though we’re merit neutral, I’d note that . . . bitcoin is primarily a speculative, volatile asset that’s also used for illicit activity including ransomware, money laundering, sanction evasion, and terrorist financing, said Gensler.
While increased regulation and integration with traditional finance may reel in some of crypto’s excesses, risks remain. Scams and fraud attempts continue. Just this month, an online pastor was charged with civil fraud for creating a cryptocurrency he claimed was ordained by God to make buyers wealthy.
So, while digital assets become more mainstream, with major players like BlackRock lending legitimacy, the asset class remains highly speculative. Crypto critics would be unwise to stop questioning its fundamental value proposition.
With prices recovering but risks still abundant, the blockchain revolution continues to evolve rapidly. While increased regulation may curb historic levels of volatility and mania, only time will tell whether cryptocurrency represents the future of finance or a passing fad. For now, a healthy dose of skepticism remains warranted from all sides.
