The price of bitcoin rose today after the U.S. Securities and Exchange Commission approved proposals for 11 spot bitcoin exchange-traded funds, a day after SEC’s X Inc. (Twitter) was hacked and made the same announcement.

Years in the making, the SEC’s approval was warmly greeted by investors, with bitcoin surging above $47,600 before settling to around $46,600. The price of bitcoin hit highs of $48,000 yesterday following the premature announcement of the decision on X following the SEC’s account being hacked before dropping to $45,100.

Bitcoin ETFs are a type of investment fund that tracks the price of bitcoin and is traded on traditional stock exchanges rather than cryptocurrency exchanges, allowing investors to invest in bitcoin without holding actual cryptocurrency. A bitcoin ETF represents shares in a fund that has bitcoin as its primary asset, with investment values rising and falling in value in tandem with the changes in the price of bitcoin.

The SEC has rejected multiple applications to launch bitcoin spot ETFs in recent years, citing underlying arguments that cryptocurrency markets are vulnerable to market manipulation. Until today, the SEC had only approved ETFs tied to bitcoin and Ethereum futures contracts trading on the Chicago Mercantile Exchange.

The 11 spot bitcoin ETFs that have now been approved come from Bitwise Asset Management LLC, Grayscale Investments LLC, Hashdex Ltd., BlackRock Inc., Valkyrie Digital Assets LLC, BZX Exchange Inc., Invesco Ltd., VanEck Global Holdings Inc., WisdomTree Investments Inc., Fidelity Invesments Inc. and Franklin Franklin Resources Inc.

In a statement, SEC Chair Gary Gensler said that the approval of the spot bitcoin ETFs does not constitute an endorsement of bitcoin or the general crypto industry before adding that the SEC continues to hold the view that bitcoin and crypto are risky and volatile assets.

Gensler also noted that at the end of the day, the SEC did not have a choice but to approve the ETFs following a ruling in the U.S. Court of Appeals for the District of Columbia that found that the Commission failed to adequately explain its reasoning in disapproving the listing and trading of a proposed fund from Grayscale. “Based on these circumstances and those discussed more fully in the approval order, I feel the most sustainable path forward is to approve the listing and trading of these spot bitcoin [exchange traded product] shares,” Gensler wrote.

Enter the FBI

The world of bitcoin and cryptocurrency is never boring and that’s true for the drama around the hack of the SEC’s X account and premature approval message yesterday.

The U.S. Federal Bureau of Investigation has reportedly launched an investigation into the hack and top Senate Banking Committee Republican Tim Scott is seeking information from the SEC and its Office of Inspector General.

The safety team at X has also tweeted in response to the hack, saying that an unidentified individual obtained control over a phone number associated with the SEC account through a third party. The safety team also added that the account did not have two-factor authentication turned on.

We can confirm that the account @SECGov was compromised and we have completed a preliminary investigation. Based on our investigation, the compromise was not due to any breach of X’s systems, but rather due to an unidentified individual obtaining control over a phone number…

— Safety (@Safety) January 10, 2024

However, the latter part appear to make no sense. If the phone number associated with the account had been SIM-jacked and two-factor authentication had been turned on, the 2FA SMS would have gone to the SIM-jacked number, giving the hacker access anyway. Although it’s fair to say that X wasn’t at fault here, its response is bizarre, to say the least.

Image: SEC/Flickr