Landing’s Crypto Crime Defense Series 5: Bitcoin ETF Approval in the US Does Not Mean Official Recognition of Bitcoin

Landing Guangzhou, January 12, 2024, 10:19 AM, Guangdong

On the afternoon of January 10th, US time, a Bitcoin spot ETF was approved by the US Securities and Exchange Commission (SEC) and will officially begin trading on January 11th. Driven by this news, Bitcoin rose more than 2.3% that day, and over the past year, influenced by this uncertainty, Bitcoin has risen by 166% overall.

ETF stands for "Exchange-Traded Fund," and it's not significantly different from the various ETFs held by ordinary stock and mutual fund investors.

Simply put, an ETF is not an actual asset, but rather an index that tracks the price changes of multiple assets. A Bitcoin ETF, therefore, is an investment product whose value changes with the price of Bitcoin.

In other words, buying a Bitcoin ETF is equivalent to indirectly investing in Bitcoin. If the price of Bitcoin rises, the ETF will also rise, and vice versa.

For ordinary people, the most direct benefit is that investors don't need to directly buy Bitcoin and don't bear the risk of Bitcoin being stolen. At the same time, the opening of exchanges and the lowering of trading barriers allow ordinary people to invest in Bitcoin by buying and selling ordinary stocks, and also attract investment from various other institutions, potentially leading to a significant increase in investment scale.

The answer is a definite no.

In a subsequent statement, Securities and Exchange Commission (SEC) Chairman Gary Gensler emphasized, "This 'approval' does not represent recognition of Bitcoin."

Gensler explicitly stated, "Today's SEC action is limited to exchange-traded products holding Bitcoin, a non-security asset. This does not indicate that the SEC intends to approve listing standards for crypto asset securities, nor does it indicate that the SEC recognizes the status of other crypto assets under federal securities laws, nor does it change the SEC's view that certain crypto asset market participants are currently non-compliant."

The author similarly believes that the SEC's approval of the Bitcoin ETF does not represent US recognition of Bitcoin's legal asset status.

On the contrary, because Bitcoin and the entire virtual currency industry have long been exploited by various illegal and criminal activities, the industry has long existed in a regulatory gray area. Despite this, many investors and institutions have risked theft and robbery to purchase it. To protect the legitimate interests of US institutional and retail investors and bring these funds under legal regulation, after years of back-and-forth, the SEC's final approval can be described as a "last resort."