Bitcoin ETF? Bank of Singapore says SEC under Gensler may alter view on digital currencies as US$176 billion sell-off highlights risks

Bitcoin has declined by more than a fifth since the digital money peaked at US$41,981 on January 8

Gensler, Biden’s pick as SEC chairman, has focused on blockchain, digital currencies and fintech during his teaching time at MIT Sloan

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A Bitcoin ETF is generally regarded the Hoy Grail of cryptocurrency world since the first coin was mined more than a decade ago, though it may not rival gold as safe-haven anytime soon. Photo: Shutterstock

Published: 11:34am, 24 Jan 2021Updated: 11:34am, 24 Jan 2021

The US Securities and Exchange Commission (SEC) may become more accommodative to cryptocurrencies under the new incoming chief, a potential boost for digital assets seeking to establish their reputation amid Bitcoin’s US$176 billion sell-off from record-high this month.

The market regulator has been sceptical about digital money but incoming chairman Gary Gensler may be willing to allow broader investment in the asset, according to Bank of Singapore, citing his teaching on the subject at the Massachusetts Institute of Technology.

Gensler, who is President Joe Biden’s pick to lead the SEC, has focused on blockchain, digital currencies, financial technology, and public policy during his time at MIT Sloan which he joined in 2018, according to the faculty. He also led the Commodity Futures Trading Commission from 2009 to 2014 under the Obama administration.

“An important milestone here would be if the SEC approved an exchange-traded fund (ETF) for Bitcoin or another cryptocurrency,” chief economist Mansoor Mohi-uddin wrote in a report published on January 22. “This would offer a trustworthy, reliable investment vehicle, allow fresh participants to enter digital currencies, improve liquidity, lower volatility and help deal with reputational risks.”

Bitcoin recently traded at about US$32,513 each on Saturday, according to data compiled by Bloomberg. The cryptocurrency has more than doubled from 2017’s high to a record US$41,981.76 on January 8. The sell-off from the peak this month has erased an estimated US$176 billion of value, prompting investors to google ‘double-spend’ for explanation.

While Bitcoin futures are listed on the Chicago Mercantile Exchange, its thinner volume suggests investors are not fully embracing it as a fully fledged currency. Transactions on yen futures was five times higher on January 22, according to Bloomberg data.

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