Following the reported hacking of its X account, the Securities and Exchange Commission (SEC) announced on Thursday the approval for the listing and trading of several spot bitcoin exchange-traded product (ETP) shares.
This move is especially noteworthy considering the SEC’s historical trend of consistently denying approval for bitcoin ETF requests over the past decade, often citing concerns about market manipulation and investor protection.
Now on the other side of the decision, AMP chief economist Shane Oliver has said that Australian regulators are likely to follow suit.
“This will improve and widen access to bitcoin by making it easier to access via regular investment accounts rather than, e.g., crypto exchanges that have had issues,” Dr Oliver explained.
“It also brings the crypto industry closer to the world of regulated traditional finance.”
Anticipation of the move has been pushing up the price of bitcoin in recent months, but the historic volatility of the decentralised digital currency should give investors pause, according to the economist.
“Making it easier to get into and out of an ‘asset’ should mean higher valuations – just as the progression from individual share investing to managed funds, indexed funds, futures, ETFs, etc, with ever more liquid stock exchanges, etc, has added to the liquidity of share markets, meaning that shares are now able to trade on higher PEs than was the case say in 1900,” Dr Oliver said.
The only problem, he noted, is that it has yet to establish a clear use – beyond being something to speculate on or for use in illicit transactions – since launching in 2009, thereafter lacking the “fundamental E in a PE” (price-to-earnings ratio).
“It’s very unlikely to be used on a broad basis for transactions in well-managed countries (and that does not include El Salvador!), its extreme volatility means that it’s not a good store of value and it’s not a good hedge against inflation having collapsed in 2022 just when inflation surged.
“This makes it impossible to value, unlike, say, property or shares where a stream of rent or earnings provide a basis for valuation and very different to commodities that have industrial and consumer uses.”
As such, Dr Oliver said he remains a sceptic and fears bitcoin, and much of the recurring and expanding buzz around crypto, “is just a house of cards”.
“Of course, none of this means bitcoin can’t go higher – particularly with its next ‘halving’ coming up – for those keen to ‘hodl’ (“hold on for dear life”) or trade it using technicals,” he concluded.
In the Asia-Pacific region, Global X was the first provider to launch spot bitcoin and Ethereum ETFs. The Global X 21Shares Bitcoin ETF (Cboe: EBTC) and Global X 21Shares Ethereum ETF (Cboe: EETH) remain the only spot cryptocurrency ETFs in Australia. Reports are, however, circulating that the ASX is due to soon approve the listing of a local bitcoin ETF created by Monochrome Asset Management.
