SEC yet to approve bitcoin ETFs

Bitcoin spiked to its highest level in almost two years after an unauthorised message on X said US regulator SEC had approved a much-awaited crypto listing.

Gary Gensler, chairman of the U.S. Securities and Exchange Commission (SEC).

Bitcoin spiked to its highest level in almost two years after an unauthorised message on the Securities and Exchange Commission’s account on X, previously known as Twitter, said the regulator had approved the listing of exchange traded funds based on the cryptocurrency.

The message which later appeared to be deleted, briefly sent the price of bitcoin up about 2.5 per cent to a 22-month high of $US47,914.34 on Wednesday morning AEDT.

Bitcoin soon fell to $US45,021.05, retreating as much as 6 per cent intraday after SEC chairman Gary Gensler said the SEC’s Twitter account was “compromised” by an “unauthorised” tweet.

“The regulator in fact hasn’t yet approved spot bitcoin ETFs at this time,” Mr Gensler tweeted.

“The @SECGov Twitter account was compromised, and an unauthorised tweet was posted. The SEC has not approved the listing and trading of spot bitcoin exchange-traded products.”

The apparent hoax may dent confidence but the SEC was still widely expected to approve spot bitcoin ETFs by Thursday AEDT.

Pepperstone head of research Chris Weston said on Wednesday an SEC announcement was expected in the session ahead, given the regulator’s formal deadline of January 10 (US time) “and most likely we’ll see it confirmed from Gary Gensler’s X account.”

In October, a false X post on a news site about the SEC approving BlackRock’s spot bitcoin ETF application caused bitcoin to spike 10 per cent.

It reversed its gains after BlackRock said there hadn’t been a decision on its application.

After that incident, Mr Gensler urged the public to check filings on the SEC’s official website for such information.

Bitcoin has more than doubled since last January, in part on the expectation approval would fuel further purchases of digital currencies. It soared more than 150 per cent in 2023, including a 55 per cent rise in the December quarter.

BlackRock Inc, ARK Invest and several other prospective issuers of bitcoin ETFs filed amended forms on Monday in a final push to offer the investment products a decade after the first application.

“It seems increasingly likely that we’re going to see ETF approval from the SEC, especially with all the amendments to the initial registration form currently happening around fees as applicants look to compete with one another to attract investors,” said eToro market analyst Josh Gilbert.

“Regardless of this SEC decision, we are constructive on crypto and bitcoin’s year ahead.”

ARK chief executive and founder Cathie Wood said in October the SEC appeared likely to approve a spot bitcoin ETF within “the next few months”, and it “will be the seal of approval that institutions have been waiting for, before they move into this new asset class.”

Aside from any newly approved products, everyday investors who want to buy and sell digital currencies using traditional brokerages must use futures-based bitcoin ETFs, which use derivatives contracts to provide exposure to bitcoin price moves, or products traded in the lightly regulated over-the-counter market.

An SEC spokeswoman said she didn’t know what caused the breach. About 30 minutes after the false post, the SEC’s main X account retweeted Gensler’s announcement.

Around a dozen companies have applied to list ETFs backed by bitcoin in the US.

The SEC had given itself until January 10 to act on at least one of those applications.

“Spot ETFs are likely coming sooner rather than later given the progress made so far, and ethereum spot ETFs are coming behind bitcoin,” said eToro’s Gilbert.

“The next halving event is also about 100 days away, and we’ve seen in the past how this has been a marker for the start of bull markets.

“We’ve also got looser financial conditions on the horizon after the dovish pivot from the Fed at the end of last year, with markets pricing in cuts as early as March, which historically is when asset prices — including equities and cryptocurrencies — have performed well.”

He added ETFs would “bring institutional capital and grow trust in the industry.

“Bitcoin ETFs could be a major step forward in the wide-scale adoption of bitcoin.”