The U.S. Securities and Exchange Commission (SEC) made a statement on Tuesday denying the approval of bitcoin exchange-traded funds (ETFs) amid a social media hack. A tweet from the SEC’s official Twitter account indicated that the agency had approved bitcoin ETFs for trading. However, the SEC quickly clarified that the tweet was unauthorized and that there had been a compromise of their Twitter account. This news caused a momentary spike in the price of bitcoin, but it quickly fell back below $46,000.
Following the incident, an SEC spokesperson confirmed that there had indeed been unauthorized access to the SEC’s Twitter account “by an unknown party” for a brief period. The SEC stated that they would be working with law enforcement and government partners to investigate the matter and determine any related misconduct. This incident comes as the SEC is expected to make a decision on bitcoin ETFs this week after opposing them for years.
The price of bitcoin has been steadily rising in recent months, fueled in part by the growing optimism that spot bitcoin ETFs would finally receive approval. More than a dozen asset managers have filed applications to create bitcoin ETFs, with some even filing updated registration statements on the same day as the social media hack. The hope is that the launch of these ETFs would attract a new type of investor into the digital assets space.
Exchange-traded funds (ETFs) are widely used by financial advisors and investors as a convenient and accessible investment instrument. The potential approval of bitcoin ETFs would enable advisors and investors who may have been hesitant about the complexities of bitcoin custody to participate in the cryptocurrency market through the ETF wrapper. This would offer a more familiar and regulated framework for investment in cryptocurrencies.
SEC Chair Gary Gensler has been a vocal critic of cryptocurrencies during his tenure. The SEC has taken legal action against several major crypto exchanges and has been cautious in its approach to approving bitcoin ETFs. Earlier in the week, Gensler used his own social media platform to warn investors about the risks associated with products tied to crypto.
Last year, the SEC lost a court case against crypto asset manager Grayscale, which aimed to convert an over-the-counter trust holding bitcoin into an ETF. The SEC decided not to appeal the ruling, leading to speculation that the regulator was preparing to approve bitcoin ETFs. However, the recent denial of ETF approval indicates that the SEC is still hesitating to embrace widespread cryptocurrency investment vehicles.
The recent hacking incident that led to a false social media post about bitcoin ETF approval by the SEC has caused temporary market volatility. The SEC has confirmed unauthorized access to its Twitter account and is actively investigating the matter. The decision on bitcoin ETFs, which was expected this week, is still pending, leaving both investors and crypto advocates eagerly awaiting the outcome. The potential approval of bitcoin ETFs could bring a new wave of investors into the digital asset space, but the SEC’s cautious stance on cryptocurrencies raises questions about the future regulatory landscape for the crypto market.