The Securities and Exchange Commission (SEC) in early January made it easier to own Bitcoin, putting a smile on some faces but causing furrowed eyebrows on others.1 Mainstream investors have long wanted a way to buy and sell Bitcoin as easily as they trade stocks. However, critics have been concerned that widespread ownership of crypto may introduce too much risk and volatility into investment portfolios, especially retirement accounts.2 The Decision By a 3-2 decision, the SEC determined that exchange-traded funds (ETF) that hold actual Bitcoin could be sold to the public. Previously, the SEC had only approved ETFs that hold Bitcoin derivatives. But now investors can own what’s called a “spot-Bitcoin ETF,” which buys and sells the digital currency.3 My Perspective Bitcoin exchange-traded funds could be suitable for certain aggressive investors as part of a well-diversified portfolio. But, they may not work for an investor with a low-risk tolerance or a short time horizon. Cryptocurrencies lack regulatory and investor protection structures, which is important to keep in mind if you are considering adding Bitcoin to your investable assets. ETFs are sold only by prospectus. Please consider the charges, risks, expenses, and investment objectives carefully before investing. A prospectus containing this and other information about the investment company can be obtained from your financial professional. Read it carefully before you invest or send money. Industry Divided Warren Buffett, one of the loudest Bitcoin critics, has said, “Something like Bitcoin, it is a gambling token that doesn’t have any intrinsic value.”4 JP Morgan Chase Chief Executive Officer Jamie Dimon shares that sentiment, saying, “I call it the pet rock.” Dimon, in early January, said he’s done even talking about Bitcoin.5 Bitcoin proponents point out that digital currency has a limited supply and believe that the lack of regulation by any government or central bank oversight is a positive. For example, they explain that the Federal Reserve regulates banks, but it only monitors cryptocurrency that happens to be held by banks in the U.S.6,7 What’s Next? British multinational bank Standard Chartered plc anticipates that spot Bitcoin ETFs will see inflows in the range of $50 billion to $100 billion in 2024.8 Should some of that inflow come from your investable assets? You’ll have to make that decision. I’ll be here to help determine how Bitcoin fits into your portfolio based on your goals, time horizon, and risk tolerance. |
1. WSJ.com, January 10, 2024. “SEC Approves Bitcoin ETFs for Everyday Investors.” |
SEC Approves Bitcoin ETFs
