The SEC may save crypto

Which they absolutely should not do.

The Securities and Exchange Commission, which has done a decent job of protecting the public from cryptocurrency scams, is on the verge of making a disastrous decision to allow financial companies to offer the equivalent of exchange-traded funds comprised of Bitcoins.

The sponsors include BlackRock, Fidelity, and 11 other firms.

In anticipation of a favorable SEC ruling, the price of Bitcoin, which had languished around $25,000 as recently as last September, has been bid up to over $45,000. The financial press has reported that BlackRock alone has at least $2 billion lined up for this play and that the first-quarter trading volume could be $40 billion. With crypto mercifully dying of its own weight, the SEC could throw it a lifeline.

SEC Chair Gary Gensler, who once taught a course on crypto at MIT, has long warned that creations like Bitcoin, backed by nothing other than speculative expectations of investors, are dubious investments lacking the safeguards that the securities laws impose on stocks and bonds. Exchange-traded funds made up of Bitcoins operate at one further remove from scrutiny. The main beneficiaries are the financial companies that propose to offer them. - The American Prospect