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Bitcoin has ‘Staying Power’ and is ‘Validated’ by Wall Street Interest, But is it Good for BTC?

Published July 12, 2023 2:55 PM
Omar Elorfaly
Published July 12, 2023 2:55 PM

Key Takeaways

  • Big-time financial institutions’ involvement in Bitcoin solidifies crypto’s position as a valid investment
  • BlackRock was never supposed to be the first spot ETF
  • Was it really all about transparency or was the SEC just not sure about Bitcoin? 

Crypto, specifically Bitcoin, has been around since its inception in 2009. People have traded back and forth using the token, whether to buy pizza or services over the internet. For the longest time, regulating bodies didn’t take the technology and its potential seriously.

Bitcoin In The Government’s Crosshairs

Governments started to take Bitcoin and other cryptocurrencies seriously when users started utilizing them for purposes that were deemed unfavorable. Whether it was cases in which crypto was used to purchase illegal substances or others in which financial entities would evade taxes.

Things, however, took a serious turn when crypto-run businesses started causing damage to the financial wellbeing of citizens and governments alike. The FTX collapse really caught the attention of regulators at a whole new scale, simply because it caused billions of dollars in losses.

Ever since, regulators have been extra strict on the industry, going on the offensive against any private organization that may pose the threat of creating an FTX-like situation. While Terra’s and Celsius‘s collapses did occur, causing even more billions of dollars in damage, regulating bodies have stayed vigilant and somewhat aggressive against crypto.

Wall Street Loans Credibility To Bitcoin

Now, crypto, most specifically Bitcoin, is witnessing a phoenix-like revival due to corporate interest. The involvement of major financial corporations such as BlackRock, ARK, and Fidelity in crypto brings the promise of governmental and private regulation of the market. 

As a result, Bitcoin now has a better chance to receive a green light to grow and increase in utility as a payment option. So, as the trend goes, Bitcoin is looking optimistic in both value and regulation. 

Not Wall Street’s First Attempt At Crypto

Way before BlackRock, Fidelity, and co, Grayscale Investments had the crypto market to itself. Establishing Grayscale Bitcoin Trust (GBTC), the company manages $19.1 billion in assets.

Interestingly, Grayscale filed to convert GBTC to an ETF in partnership with the New York Stock Exchange. However, after stalling for a long time, the SEC rejected Grayscale’s application last June, citing that the proposal lacked sufficient anti-fraud guarantees. 

The SEC’s decision was questioned not only by Grayscale but also by other governmental entities . Following the news, Grayscale filed a lawsuit against the SEC on the matter, yet no solid decision was taken thus far. 

During an interview with CNBC, Grayscale Investments CEO Michael Sonnenshein celebrated the emergence of financial institutions such as BlackRock and Fidelity in the crypto space. 

“To see literally the largest asset manager in the world publicly commit to advancing their crypto efforts only lends validity to the asset class and the staying power that it has,” said Sonnenshein.

The Grayscale CEO is perhaps more optimistic about his company’s ETF application now that BlackRock and co seem to be on their way to getting SEC’s approval.

“If we’re successful in that challenge there’s actually billions of dollars in investor capital that would be unlocked through that.”

Will Bitcoin Stay “Decentralized”?

It’s fair to start looking at Bitcoin optimistically as an option for investment, as signs are showing toward a more stable future for the token. It’s equally fair to assume that Bitcoin will likely increase in value in the future following Wall Street’s involvement in the market. 

It is somewhat fair to also assume that Bitcoin will fall under a lot more restrictions as such corporations will continue to build their own fortifications to avoid potential collapses on their investments.

With that in mind, the token that was once celebrated for being so decentralized people used it to buy pizzas online, is likely to be regulated by the same powers that controlled the traditional financial world that led people toward decentralized tokens in the first place. On top of that, regulating bodies are likely to add more regulatory constraints to tokens such as Bitcoin, effectively treating it as any other TradFi investment.

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