For 15 minutes, the cryptocurrency industry was euphoric.
At 4:11 p.m. Tuesday, the Securities and Exchange Commission’s official X account announced that regulators had approved a new investment product that tracks the price of Bitcoin, an apparent victory for the beleaguered crypto industry. Coinbase, a giant cryptocurrency exchange, posted a celebration banner. Cryptocurrency fans hailed it as a historic day for the industry.
Then, at 4:26 p.m., Gary Gensler, chairman of the SEC, aware that the agency’s account had been compromised, resulting in an “unauthorized tweet.” An SEC spokeswoman confirmed the hack in an emailed statement.
The security breach was the latest twist in the crypto industry’s years-long search for an investment vehicle known as an exchange-traded fund tied to the price of Bitcoin. Since the fall, cryptocurrency enthusiasts have been counting the days until the January 10 deadline for the SEC to decide whether to allow a Bitcoin ETF. The price of Bitcoin has risen more than 60 percent in recent months, fueled by growing optimism that an approval was imminent. .
An announcement was widely expected this week, with major financial firms such as BlackRock and Fidelity set to launch Bitcoin products. On social media, there has been speculation about the exact timing of an approval, inspiring memes about once-obscure SEC proceedings and propelling ETF analysts to online stardom.
But the industry will have to wait.
“The SEC has not approved the listing and trading of spot bitcoin exchange-traded products,” Gensler wrote in his post.
An ETF is a basket of assets in which shares are traded on traditional exchanges such as Nasdaq. Investors in a Bitcoin ETF would own part of a basket containing Bitcoin, sparing them some of the risks and drawbacks associated with directly purchasing cryptocurrencies.
Cryptocurrency enthusiasts have long hoped that approval of the financial product would bring billions of dollars of new investment into the industry, attracting wealth managers who in the past had been hesitant to invest clients’ money in cryptocurrencies.
For years, the SEC resisted the industry’s pleas, arguing that the cryptocurrency market was ripe for manipulation. But in August, the agency lost a legal battle with one of the companies hoping to offer the Bitcoin fund, paving the way for its approval.
That legal victory was a rare bright spot in a bleak period for the crypto industry. Since mid-2022, cryptocurrency prices have plummeted and several major companies have filed for bankruptcy, leading to criminal proceedings. Gensler has led the charge against the industry, filing lawsuits against prominent companies such as Coinbase and its biggest international rival, Binance.
So, the crypto industry was ready to celebrate when the social media post was published on the SEC’s official X account on Tuesday afternoon. A brief statement appeared above a thumbnail image of Mr. Gensler.
“Today, the SEC grants approval for Bitcoin ETFs to list on all registered national stock exchanges,” the post said. “Approved Bitcoin ETFs will be subject to ongoing surveillance and compliance measures to ensure continued investor protection.”
Bitcoin’s price briefly soared to nearly $48,000, before falling closer to $45,000 after the SEC announced the hack.
