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Earlier this week, the SEC postponed its decision on whether to approve Bitwise’s crypto index ETF until March 3. Bitwise, a leading asset manager for crypto-backed investment funds, seeks to have its Bitwise 10 Crypto Index Fund (BITW) on the NYSE Arca. The fund tracks the performance of the 10 largest digital assets based on market capitalization and has been trading on the QTCQX Best Market since 2017.
With a new, crypto-friendly administration in DC taking office on Monday, the decision may rest in the hands of incoming SEC Commissioner Paul Atkins. President-elect Donald Trump wrote about his SEC pick on his Truth Social platform:
“He recognizes that digital assets & other innovations are crucial to Making America Greater than Ever Before.”
This bodes well for the approval of Bitwise’s index fund. However, a decision in favor of Bitwise won’t come without its opponents.
For example, Bartlett Naylor, a financial policy advocate at Public Citizen, expressed concern over the implications of the industry pouring an unprecedented $119 million into political campaigns. He believes these donations come with strings attached and that an overtly pro-crypto SEC would undermine investor protections.
“Crypto companies’ unprecedented political spending apparently just bought them control of the nation’s investor protection police,” said Naylor last month.
His concerns shouldn’t be discredited outright due to the industry’s well-documented history of scams and sketchy risk management practices. However, a quick dive into Naylor’s views reveals someone ideologically opposed to crypto to his core. Therefore, he is unable to recognize that the crypto industry is vastly different from what it was in 2021.
In May, he “strongly urged” members of Congress to vote against President Biden’s Financial Innovation and Technology for the 21st Century Act simply because the “bill would legitimize cryptocurrency.” Note that this bill, which passed in Congress and is waiting to be voted on in the Senate, would provide a robust regulatory framework with strict registration and compliance requirements. It includes consumer protection safeguards that demand regulators have access to source code, transaction history, economic models, and more.
It’s unclear if this legislative act will provide the incoming administration with a template to add and subtract from, as speculation continues regarding what Trump’s policy may look like, and when it will be revealed.
However, any regulation that prioritizes integrating digital assets into the mainstream while supporting innovation and providing consumer protections should be broadly welcomed. Although the industry is certainly optimistic about the positive impacts of Trump’s presidency and continues trending upward, crypto will remain volatile until it becomes better integrated with mainstream finance.
Progress is being made on bridging digital and traditional financial ecosystems, and as the industry gradually onboards new adopters, crypto indexes like Bitwise will remain beneficial. It would make sense to see crypto indexes garner more interest from retail investors and new users, regardless of how the SEC rules on the Bitwise case in March.
While not as popular as many decentralized platforms or centralized exchanges, crypto indexes can cater to both retail and institutional users. They can also simplify the onboarding process for non-crypto natives while providing an effective tool to mitigate risk for a volatile asset class.
Take J’JO Finance for example. The platform helps onboard investors with its J’JO35 Index, which automates investing in the top 35 digital assets based on market capitalization, readjusting every month as the tokens fluctuate. This provides investors with reliable assets at minimal risk, a diverse basket of assets, and the freedom and flexibility to not have to worry about studying, analyzing, and monitoring market trends. Since J’JO aims to onboard investors while prioritizing user satisfaction, its product can be accessed for free.
Despite those who are still dedicated to spoiling crypto normalization, the industry is powering forward. As it does, new and old users are benefiting from an abundance of investing tools and services that will help expand the industry’s impact and challenge mainstream financial markets. With regulatory clarity expected, crypto indexes have a chance to play an important role in the next chapter of digital assets.
