Despite SEC Chairman Gary Gensler's warning to investors to think twice before pouring money into crypto products, the volume of the newly approved Spot Bitcoin ETF on Friday declined from its launch. It soared to more than $5 billion in just two days.
After years of controversy over legality, the SEC approved 11 exchange-traded funds this week, including products offered by investment giants BlackRock, Fidelity, and Grayscale.
The approval was seen as a major victory for crypto sellers who wanted to open up their assets to more investors.
By purchasing an ETF, investors are acquiring shares in a fund that owns Bitcoin, rather than purchasing the token itself.
Gensler indicated that he remains highly skeptical about cryptocurrencies. Appeared on CNBC “Squawk Box” on friday.
“Investors should be aware that the underlying assets are highly speculative and volatile assets,” Gensler said. “Some of its use cases actually include illegal activities such as money laundering, sanctions, and ransomware.”
The SEC chairman said his agency determined that ETF approval was “the most sustainable path forward,” but the SEC still has no intention of approving or supporting “Bitcoin itself” as an asset. He emphasized that he had not.
“This is a speculative and unstable store of value. Is it being used as payment somewhere? Buying coffee with it? Not so much. The only payment mechanism used in the main sense is illegal. It’s an act,” Gensler added.
Trading activity in early trading on Friday exceeded $900 million, after the ETF debuted with about $4.6 billion in volume the previous day. The Block reportedThe report cited data from Reuters and Yahoo Finance.
Other Wall Street firms are taking a wait-and-see approach to the ETF, which critics other than Mr. Gensler have called a risky investment. Vanguard, a major asset management company, no longer offers ETFs to its customers.
Merrill Lynch, Edward Jones and Northwestern Mutual also have no immediate plans to offer any of the 11 approved ETFs. Fox Business reported.
Elsewhere, the South Korean Financial Services Commission warned domestic investors that US Bitcoin ETFs may violate domestic laws regarding digital assets.
Following Wednesday's ETF approval, Bitcoin prices soared past the $46,000 threshold, the highest level since December 2021.
By Friday, the gains had tapered off some, with Bitcoin down nearly 6% to $44,502 as of late morning, according to Coinbase data.
Eric Balchunas, senior ETF analyst at Bloomberg, called the Bitcoin ETF's opening day a “huge success.”
“It was a historic success by every metric: volume, number of trades, flows and media coverage,” Balciunas wrote in X. “And that was despite limited platform availability.”
