The SEC’s approval of Bitcoin exchange-traded funds (ETFs) marks a significant shift with potential to transform both the crypto markets and the global financial system. Avik Roy of Forbes highlights that while short-term effects often draw attention, the real change lies in the evolution of Bitcoin’s fundamental operation and the increased difficulty for the U.S. to ban crypto assets.
Satoshi Nakamoto introduced Bitcoin with a capped supply of 21 million units, addressing long-standing concerns about government tendencies to devalue currencies through excessive spending and money printing. Unlike fiat currencies, Bitcoin’s fixed supply cannot be altered by political actors, theoretically making it a more reliable store of value over time.
While the U.S. government technically cannot ban Bitcoin, as it operates on a decentralized network outside U.S. jurisdiction, it could theoretically restrict Bitcoin transactions through exchanges or prevent mainstream banks from engaging with Bitcoin-focused businesses. However, the advent of ETFs makes such a ban more challenging, as it would now involve major financial players with substantial investments in Bitcoin.
ETFs significantly increase the vested interest in Bitcoin’s role in U.S. financial markets, making it harder for policymakers to restrict its adoption. Any attempt to impose restrictive policies would not only face public backlash but also opposition from influential financial entities in Washington. Currently, over $25 billion is held in Bitcoin ETFs, which is a tangible revenue stream even for financial giants like BlackRock.
The SEC is aware of the implications of approving Bitcoin ETFs, a decision influenced by a court opinion that criticized the SEC’s resistance as “arbitrary and capricious.” Despite concerns over Bitcoin’s use in illegal activities, SEC Chairman Gary Gensler felt that approving the listing was the most sustainable path forward. The approval of Bitcoin ETFs makes it significantly harder for the U.S. government to dismantle the Bitcoin market, at least in the foreseeable future.