March 14, 2022 - 3:00pm

In an unsurprising move, the U.S Securities Exchange Commission (SEC), whose main purpose is to prevent and punish rampant market manipulation, is chipping away at the crypto’s legitimacy as a digital currency. Last week, it rejected the latest attempts by financial services companies NYDIG and Global X to list Bitcoin exchange-traded funds (ETF) as a “spot” product — meaning its price reflects what buyers pay for “immediate delivery” for Bitcoin. Instead, the SEC has added them to a long list of entities it has previously rejected, including big firms like Fidelity, VanEck, and WisdomTree.

These are some of the many corporations trying to jump on the hype train surrounding Bitcoin and cryptocurrencies. Their websites feature the common yet confusing siren call of promoting economic freedom and equality. NYDIG’s main homepage heading, for instance, reads: “Bitcoin For All.” But the reality is that this supposed economic liberty has created a new neo-feudal order in which a small minority of crypto-owners own the lion’s share of wealth. 

What’s more, the free-market forces behind crypto’s “Wild West” image have so far failed to form a self-regulating monetary system. Instead, we’ve witnessed the rise of Tether Ltd., a stablecoin (i.e. a cryptocurrency) that is pegged to one U.S. dollar, which has become a financial institution that issues its own currency, creating over $80 billion in phoney money with no accountability or oversight. In other words, it’s an offshore “wildcat bank”.

While traditional media, for objectivity reasons, has to remain neutral when reporting on Tether (outlets prefer to describe it as “controversial,”) the truth is that the company is an illicit enterprise. It facilitates almost 70% of all crypto trading volume while providing most of the liquidity to prominent crypto entities like exchanges, which have also been shown to manipulate over 90% of their trading activity. So as Tether comes up time and time again, it’s likely the main reason the SEC has denied the approval of these Bitcoin ETFs.

Still, the crypto lobby, which now contains VCs like Andreessen Horowitz and a small faction of the Washington elite like Cynthia Lummis and Pat Toomey, will stop at nothing to bring Bitcoin into the mainstream. Even the head of the SEC, Gary Gensler, who has a history of being favourable to blockchain tech, is somewhat siding with the pro-crypto lobby by supporting a Bitcoin futures ETF product, which is essentially a derivative of a highly manipulated currency. At the same time, he claims that that a Bitcoin spot ETF is too exposed.

So it seems that the mass bureaucratic mismanagement and conflicts of interest in this space have resulted in a crazy dynamic, where companies have been applying for ETFs in Bitcoin in a state that’s also calling crypto a threat to national security. Truly bizarre.

Greg Barker is an independent journalist and quant, who also writes under the name Concoda. You can find him on Substack and Twitter at @concodanomics.


Greg Barker is an independent journalist and quant, who also writes under the name Concoda. You can find him on Substack and Twitter at@concodanomics.