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Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
It was easy to poke fun at crypto back in late 2022. The market had tanked by about two-thirds in the space of a year; many of the industry’s biggest companies and coins had collapsed into oblivion, their flagrant practices exposed; and the bubble that had driven receipts for pixelated images of apes (remember NFTs?) to sell for millions of dollars had burst. Longtime critics like me were being encouraged to take virtual victory laps, while the crypto crew had egg, clearly, all over their laser-eyed faces.
Just over a year later, however, poking fun might seem less straightforward. Crypto prices have recovered significantly, with the market valuation having roughly doubled over the past twelve months. Earlier this month, the US Securities and Exchange Commission approved the listing of 11 spot bitcoin exchange traded funds (ETFs), giving investors exposure to the cryptocurrency via regulated products that can be bought and sold like stocks, and are issued by some of the best-established asset managers. Meanwhile, Larry Fink, head of BlackRock, the biggest asset manager in the world and one of those offering a bitcoin ETF, has become something of bitcoin evangelist, calling it “an asset class that protects you”.
Is it time for the likes of me to admit we were wrong? Was the approval of the ETFs a game-changer? Is crypto now kind of . . . legit?
The hyperbole has come in thick and fast, certainly. “It’s not unreasonable to suggest that [the SEC’s approval] may be the biggest development on Wall Street in 30 years,” Michael Saylor, executive chair of software-company-turned-crypto hoarder MicroStrategy, told Bloomberg.
“The significance of this moment cannot be overstated,” gushed Brad Garlinghouse, chief executive of crypto firm Ripple on X. “Today’s news is further legitimisation of crypto as an asset class,” he wrote.
And yet despite these lofty proclamations, and the fact that this was heralded as a landmark event by both the crypto and mainstream press, what has happened is distinctly dull. The only tiny glimmer of excitement came when the SEC’s X account was compromised, meaning the ETFs’ approval was announced ahead of time. We haven’t suddenly found out the true identity of bitcoin’s pseudonymous creator Satoshi Nakamoto. There is no newfangled initialised asset class on offer that can magic up money out of thin air (before NFTs, you might remember ICOs, STOs, and IEOs).
No, all that happened is that crypto has 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 for asset managers to eke out a bit of extra revenue.
Crypto in 2024 is, in other words, rather boring. But boring does not equal legitimate, as SEC chair Gary Gensler himself pointed out when the announcement was made. The commission’s approval of the bitcoin ETFs was not an endorsement of bitcoin or crypto more widely, but rather the result of a court ruling that found the SEC’s long-standing opposition to bitcoin ETFs — on the grounds they could be subject to fraud and manipulation — was arbitrary.
In a statement, Gensler said that “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”.
For context, some of the other ETFs that have been approved by the SEC include the “God Bless America” ETF (ticker: “$YALL”), an anti-woke “investment for God-fearing, flag-saving conservatives”; the “Inverse Cramer” ETF (SJIM) that aims to invest in the opposite of whatever TV personality Jim Cramer recommends; and a “VICE” ETF (VICE) that invests in “vice-related business activities”.
Plus, it’s not as if boring crypto is all there is now. For anyone who feels bereft of the non-boring variety, there is still plenty of that. For instance, the online pastor charged with civil fraud earlier this month after he and his wife created and sold a cryptocurrency to Christians, telling them God had told him directly they would get rich if they bought it. He has since said it’s possible he “misheard God”, and has also defended himself by saying that although it’s true that he and his wife pocketed $1.3mn, some of that was spent on a “home remodel that the Lord told us to do”.
The truth is that, whether the crypto is encased in a nice regulated wrapper and sold to you by BlackRock, or whether you buy it from a pastor who says that the Lord told him to make the sale, there is still no there there. So while it might be more difficult these days, I will continue doing what I consider to be God’s real work: taking the mickey out of it.
