ETF Passes the Beginnings of U.S. Crypto Hegemony

Source: W3C DAO

The news that the spot Bitcoin ETF was approved in the United States went through several twists and turns, and finally the dust settled.

The dust has settled

January 11, 2024, U.S. Securities and Exchange Commission (SEC) announced that it has approved 11 companies to issue Bitcoin spot ETFs, which is a historic moment for the cryptocurrency industry.

The Bitcoin Spot ETF is an open-end fund that can issue or redeem shares based on demand. It is designed to closely track the spot price of Bitcoin. ETFs, like stocks, trade on major exchanges and can be bought and sold throughout the trading day at prices consistent with the underlying asset.

But SEC Chairman Gary Gensler also mentioned that “the Commission’s action today is limited to ETPs holding non-security commodities such as Bitcoin. This in no way implies that the Commission is willing to approve listing standards for crypto-asset securities.

While we are neutral, I would like to point out that Bitcoin is primarily a speculative, highly volatile asset that is also used for illegal activities, including ransomware, money laundering, sanctions evasion, and terrorist financing.

While we approved the listing and trading of certain spot Bitcoin ETP shares today, we do not approve or endorse Bitcoin. Investors should remain cautious about the many risks associated with Bitcoin and its value relative to the cryptocurrency.”

Bitcoin Spot will provide investors with a more convenient, lower-cost, and more transparent way to participate in the Bitcoin market. They may also increase Bitcoin’s legitimacy and liquidity, thereby driving its price higher.

But at the same time, this also means that the supervision and control of cryptocurrency will be strengthened in the United States, and the initiative and voice of the encryption market will be greater. into the hands of the United States.

The initiative and voice have completely fallen into the hands of the United States

Observer Network Interviewed some senior experts and commentators, they said, “It is difficult to say that the SEC Chairman’s affirmative vote was not due to pressure from members and the court”, but judging from the results, the SEC has long Similar applications have been rejected many times over the past ten years. From the initial rejection to the current approval, the encryption industry is "step by step in accordance with the rules of others (SEC regulatory policies)."

He also said, “With the fine on Binance and the passage of spot ETFs, U.S. regulatory policies have shown a clear trend of closing the network while tightening. After the regulatory game, in the end The initiative and voice in the encryption market have completely returned to the hands of the United States.The world's largest Bitcoin mining machine market is in the United States, and the largest transaction data is in the hands of the United States.With the passage of spot ETFs, The connection between Bitcoin and the Wall Street market will be even closer. In the near future, the encryption market may become the back garden of the US financial market."

The continuation of US hegemony >

The United States is one of the largest financial markets in the world, and its attitude and policies towards cryptocurrency will have a significant impact and demonstration role on the global cryptocurrency market.

Formulation of standards

The United States guides, regulates and maintains the cryptocurrency market through the supervision and management of spot Bitcoin ETFs Maintain market order and stability and protect the interests and rights of investors.

Although the United States has shown its recognition and support for cryptocurrency, it has also provided a regulatory model and standard for other countries and regions. The establishment of standards also marked the beginning of U.S. encryption hegemony.

The largest mining machine market

The United States is the world’s largest Bitcoin mining machine market and the world’s largest master of cryptocurrency transaction data.  

The approval of spot Bitcoin ETF in the United States will make it easier for American financial and analytical institutions and investors to participate in the Bitcoin market and share the growth and benefits of Bitcoin. .  

The United States will also use spot Bitcoin ETFs to more closely connect Bitcoin transactions, mines, and Wall Street markets, and use the innovation and vitality of Bitcoin to inject new impetus into the U.S. financial market. and vitality.

Dollar Hegemony

The United States is the world’s largest economic and military power, and its attitude and policies towards cryptocurrency also reflect its global strategy and interests, as well as the U.S. dollar. The continuation of hegemony.  

By approving spot Bitcoin ETFs, the United States shows its emphasis on and utilization of cryptocurrency, and also provides a new tool and means for its global competition and checks and balances.  

The United States will also influence and control the cryptocurrency market through spot Bitcoin ETFs to prevent cryptocurrency from being used by other countries and regions to threaten and challenge the hegemony and interests of the US dollar.

Differences within the United States

As of 23:00 Beijing time yesterday, January 11, CoinDesk summarized The first-day trading volume data of 11 Bitcoin spot ETFs were obtained, with the total trading volume reaching US$3.633 billion, of which Grayscale and Invesco/Galaxy led the first-day trading volume of Bitcoin ETFs with US$532 million and US$531 million respectively.

Many commentators called this a "historic moment", but this moment was hard-won.

SEC Chairman Gensler mentioned in his report: “The Federal Court of Appeals for the District of Columbia ruled that the Commission failed to adequately explain its reasons for disapproving Grayscale’s proposed listing and trading of the ETP (Grayscale ruling).

Accordingly, the Court reversed Grayscale's ruling and referred the issue back to the Commission. Based on these circumstances and those discussed in more detail in the Approval Order, I believe the most sustainable path forward is to approve The listing and trading of these spot Bitcoin ETP stocks."

In this regard, Observer.com also interviewed some industry insiders, who said,"After ten years of pulling, the encryption market has officially entered the A new chapter controlled and recognized by regulation." He believes that listing spot ETFs in the United States, the world's largest financial market, can reach the retail consumer market, which is a huge success for the crypto market.

But the investor has reservations about compromise. He said, “The SEC Chairman’s vote in favor is hard to say without pressure from members and the courts.” (Previously, members of the U.S. House of Representatives who were friendly to the encryption industry hoped to remove Gary Gensler through legislation. .) But he emphasized, "People (SEC regulatory policies) have been restricting you for so many years. In fact, in this process, you are acting in accordance with their rules step by step."

In addition, Observer Network It also cited a statement from SEC Commissioner Caroline Crenshaw on the SEC website: “substantial evidence demonstrates” that the spot Bitcoin market is not safe from fraud or manipulation. Spot and futures products are not the same, and she disagrees with the 2023 court decision.

She said, "Today, we Relying on the dubious correlation between a decentralized, unregulated spot market and a futures market that the SEC itself does not regulate. As I pointed out, what we are relying on is an idea, or hope: whenever spot When fraud and manipulation occurs in the market, hopefully it should be obvious to the monitoring of futures markets.I don’t believe that such transparency would exist. Even if it did, we would likely not be able to remedy anything beyond our capabilities range of fraud.”