Bitcoin's Wall Street takeover frustrates the true believers of cryptocurrency
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Bitcoin's Wall Street takeover frustrates the true believers of cryptocurrency
Bitcoin's price surged to its highest level in over two years, sparking excitement among speculators, but some supporters worry that Wall Street's involvement contradicts Bitcoin's original decentralized ethos.
Navigating Web3 tides with focused insightsBy Nikou Asgari, Scott Chipolina
Translation: Baihua Blockchain
Bitcoin surged this week to its highest level in over two years, as speculators bet that the first approved cryptocurrency stock market funds (Bitcoin ETFs) will open the door to a wave of new investors.
But some ardent supporters say Wall Street's embrace strays from their vision of cryptocurrency as an alternative financial system outside government and mainstream financial oversight, cementing Bitcoin’s status merely as a speculative tool.
Xavier Nukajam, founder of a UK-based crypto startup, said: "The founding principles of Bitcoin and decentralized money were actually about going against the grain, challenging big institutions." He added, "If you create this alternative but then have to submit to what already exists... that's failure."
This submission was highlighted this week by the launch of Bitcoin exchange-traded funds, after more than a decade of rejections from the Securities and Exchange Commission.
Through these funds, investors can gain exposure to Bitcoin via listed, regulated instruments without directly holding the cryptocurrency itself. These funds are managed by Wall Street giants including BlackRock, Invesco, and Fidelity—standing in stark contrast to largely unregulated trading platforms like FTX and Binance, which were fined $4.3 billion by U.S. authorities last year for money laundering and violating international sanctions.
According to CCData, the ETFs traded on the New York Stock Exchange, Nasdaq, and the Chicago Board Options Exchange recorded a combined trading volume of $4.37 billion on their first day.
Asset manager Franklin Templeton sought to highlight their newfound crypto credentials by using red lasers on social media to depict glowing eyes on Benjamin Franklin, the company's namesake—mimicking a popular meme expressing fervent enthusiasm for Bitcoin.
Jean-Marie Mognetti, CEO of asset management firm Coinshares, said: "It’s the end of a long journey. Bitcoin has graduated with flying colors and is now recognized as an investable asset class."
Bitcoin has come a long way since its invention in 2008 by the never-identified Satoshi Nakamoto. His famous "white paper" described a payment system detached from mainstream financial institutions, relying instead on a public ledger powered by blockchain technology.
He and his early followers championed the “cypherpunk” countercultural ethos, emphasizing cryptography as a means to protect personal privacy from state interference.
However, that vision has struggled to gain real traction in the real world. Widespread use of Bitcoin as a payment tool has been limited because it is too cumbersome and slow at verifying transactions. In 2021, El Salvador adopted Bitcoin as legal tender, but most consumers there have shown little interest.
Bitcoin’s limited supply—the code allows for only 21 million tokens to ever be created—has led many to view it as a hedge against inflation and the devaluation of mainstream “fiat” currencies. Last year, global inflation spiked, yet Bitcoin prices fell, undermining that narrative.
Today, those uses of Bitcoin are less frequently discussed. But its status as a speculative asset, despite being highly volatile, has been reinforced by the recent rally and underscored by this week’s fund launches.
Hilary Allen, a law professor at American University’s Washington College of Law, said the excitement around Bitcoin ETFs “simply reveals how hollow the Bitcoin narrative has always been.” “Anyone who understands economics or finance could have told you from the start that Bitcoin would never become a payment system,” she said.
She added, “People have just been here to make quick money, watching the ‘number go up,’ ” a popular boast among crypto enthusiasts about their market gains.
U.S. regulators, wary of scandals that have plagued the crypto world in recent years, appear inclined to agree.
Even though the SEC approved the ETFs, Chairman Gary Gensler emphasized the agency was compelled to act following a federal appeals court ruling last summer. “We did not approve Bitcoin,” he said.
He noted that underlying assets in other ETFs, such as metals, have commercial and industrial uses. “Bitcoin is primarily a speculative, volatile asset, also used in illegal activities including ransomware, money laundering, sanctions evasion, and terrorist financing,” he said.
SEC Commissioner Caroline Crenshaw dissented from the approval and warned that the spot market remains vulnerable to fraud and manipulation.
Still, some in the industry believe Bitcoin is gaining newfound legitimacy, with its price surging nearly 1,300% over the past five years, far outpacing other assets.
Andrew Bond, senior research analyst at Rosenblatt Securities, said: “I think a lot of the libertarian vision was fraud and shitcoins,” referring to smaller cryptocurrencies launched solely to quickly profit founders. “If you look at where regulatory action is happening, it’s where problems exist in crypto—not in Bitcoin.”
Crypto advocates hope the ETFs will push Bitcoin’s price higher, as issuers will be required to buy tokens on behalf of their clients. These tokens will be held by custodians, while issuers create and redeem shares representing ownership stakes in the pool.
Jad Comair, founder of digital asset investment firm Melanion Capital, bought his first Bitcoin in 2013. “Back then, there were so many technical hurdles—I was genuinely afraid of losing my phone and losing my Bitcoin forever. Now, we can fully rely on financial giants like BlackRock and Fidelity, because we know they’ll take every necessary measure to protect people’s assets,” he recalled.
The biggest impact on crypto exchanges may be for long-term holders, for whom they have long been the only option. Alison Jimenez, president of securities litigation consulting firm Dynamic Securities Analytics, said: “Now the crypto market will split. Those who still want to trade crypto will continue using these exchanges. But those who want to hold Bitcoin as an investment will opt for the simpler, more straightforward ETF route.”
For some, the introduction of regulated third parties such as custodians, exchanges, asset managers, and market makers symbolizes another example of countercultural finance becoming commodified. Georgetown University associate professor James Angel pointed out that alcohol and marijuana were once illegal but are now tradable assets. “Similarly, Bitcoin was once seen as a fugitive outside the investment world, and now it’s joining the old boys’ club,” he said. “Wall Street is very good at selling things—they’ll sell anything that can make money.”
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