Bitcoin Swings Strongly After False Claim That SEC Approved ETFs

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Cryptocurrency prices fluctuated sharply on Tuesday after a fake post on the U.S. Securities and Exchange Commission’s official X account claimed the regulator had approved the first-ever bitcoin spot exchange-traded fund in the UNITED STATES.

The fake message stated just after 4 p.m. Washington time that the SEC “grants approval to #Bitcoin ETFs for listing on all registered national securities exchanges.” The information was immediately picked up on social networks, on economic news sites and on Bloomberg TV.

A little over 10 minutes later, the SEC chairman threw cold water on that announcement. Gary Gensler posted on his personal account on X: “The @SECGov Twitter account has been compromised and an unauthorized tweet has been posted. The SEC has not approved the listing and trading of Bitcoin spot exchange-traded products.

An SEC spokeswoman said the original post “was not authored by the SEC or its staff.” By 5 p.m., SEC staff had regained control of account

“The SEC will work with law enforcement and our government partners to investigate the matter and determine appropriate next steps regarding both the unauthorized access and any related misconduct,” the SEC said, assigning unauthorized access to “an unknown party”.

In a message from an official account Tuesday evening, said its initial investigation indicated that “the compromise was not due to a breach of intermediary of a third party.

“We can also confirm that two-factor authentication was not enabled on the account at the time the account was compromised,” the message states, referring to an additional layer of cybersecurity beyond a password. pass. “We encourage all users to enable this additional layer of security.”

Bitcoin rallied immediately after the release, for a gain of 1.5 percent on the day, but quickly reversed after confirmation that the news was false and the price fell as much as 3.4 percent.

Cryptocurrency Enthusiasts are on hold as the SEC is expected to decide later this week whether or not to approve Bitcoin spot ETFs, in what would be a watershed moment for the digital asset.

At least 11 asset managers have pending applications with the SEC to launch spot Bitcoin ETFs. The SEC faces a Wednesday deadline to approve some of the applications.

Although the watchdog had previously opposed these products, its room for maneuver is now reduced. A federal appeals court last year governed that the SEC’s rejection of an application filed by Grayscale to convert its $29 billion Bitcoin trust into such an ETF was “arbitrary and capricious.”

So far this year, the volatile cryptocurrency has gained around 7% on hopes that the SEC would grant approval.

Several applicants said they received feedback from commission staff that approval was possible this week.

Applicants range from large asset managers BlackRock, Invesco and Franklin Templeton to smaller firms such as Ark Investment Management and Bitwise. Earlier this week, companies fees disclosed for their potential products, with several of the candidates either significantly reducing their fees or agreeing to waive them altogether shortly after launch.

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The SEC has long maintained that spot Bitcoin ETFs cannot guarantee investors the same level of protection as traditional investment products. Gensler posted a short thread on “can be exceptionally risky (and) are often volatile.”

ETFs hold assets like mutual funds, but trade on exchanges like stocks and generally receive preferential tax treatment in the United States. Each of the pending ETFs is intended to invest solely in bitcoin, a shift from previous products that invest in cryptocurrency futures or companies involved in the crypto industry.

Additional reporting by Hannah Murphy

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