SEC approves Bitcoin investment fund, worrying cryptocurrency critics

VPM | By David Gura

Published January 13, 2024 at 1:33 PM EST

SCOTT SIMON, HOST:

This week, regulators approved a new kind of cryptocurrency investment called a Bitcoin exchange-traded fund – got it? – or ETF. Crypto companies are hopeful it will move crypto into the mainstream. And as NPR’s David Gura reports, critics worry that investors won’t fully understand the risks.

DAVID GURA, BYLINE: These new investment funds make it a lot easier to invest in Bitcoin.

CATHIE WOOD: An ETF just simplifies access.

GURA: That’s Cathie Wood, the CEO of Ark Invest. And she just got the green light from the government to sell a new Bitcoin ETF. Hers is one of 11 total. ETFs are popular investments that trade like stocks. They’re now a $7.7 trillion industry. And these new funds will track the price of the world’s best-known cryptocurrency.

WOOD: I do think that Bitcoin is the biggest idea out there.

GURA: Wood argue that this digital currency will revolutionize the way we do business. And she’s also a true believer. Her firm bought its first Bitcoin in 2015 for about $250. Today, it’s trading above $43,000. Because buying actual cryptocurrency is kind of complicated, this new option is bound to boost crypto’s popularity, Wood says.

WOOD: The ETF has been battle-tested and is a vehicle that, actually, investors love.

GURA: But not everyone is convinced, including several members of the Securities and Exchange Commission, the regulators that OKed these new investments. This was a split decision. Critics note many cryptocurrencies are extremely volatile.

DENNIS KELLEHER: We fear many investors are going to end up losing money and being harmed here.

GURA: Dennis Kelleher is the president and CEO of Better Markets. That’s a nonprofit based in Washington that focuses on consumer protection. Kelleher fears these new funds will give mom-and-pop investors a false sense of comfort ’cause they’re already familiar with other kinds of ETFs and millions of them are already customers of, or at least know of, some of the big money managers who have gotten in on the game, including Fidelity and BlackRock. Kelleher also notes the world of crypto has a reputation for being kind of scammy. The Securities and Exchange Commission has sued dozens of crypto companies and investors and promoters.

KELLEHER: The SEC in approving this ETF is like knowing there’s a very high-crime area with no cops on the beat.

GURA: And despite that, Kelleher says, they’ve authorized companies…

KELLEHER: To send buses to drop off people with wallets and lots of jewelry showing at midnight on those very same streets.

GURA: SEC Chair Gary Gensler did vote to approve these new investments, but he seems to have done so reluctantly. A recent court decision forced his hand. He’s repeatedly warned investors of the, quote, “myriad risks” associated with Bitcoin and crypto securities, most recently on CNBC on Friday.

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GARY GENSLER: It’s rife with conflicts. It’s rife with fraud and abuse.

GURA: That’s why on the first day these new investments started trading on the Nasdaq and the New York Stock Exchange, one of the largest investment managers in the world announced it’s steering clear of them. Vanguard said they’re not a building block of a well-balanced, long-term investment portfolio, and it won’t make Bitcoin ETFs available to its tens of millions of customers.

David Gura, NPR News, New York.

(SOUNDBITE OF MUSIC) Transcript provided by NPR, Copyright NPR.

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David Gura

Based in New York, David Gura is a correspondent on NPR's business desk. His stories are broadcast on NPR's newsmagazines, All Things Considered, Morning Edition and Weekend Edition, and he regularly guest hosts 1A, a co-production of NPR and WAMU.

Previously, Gura was a correspondent for NBC News and an anchor for MSNBC. His reporting aired on NBC Nightly News and TODAY, and MSNBC's dayside and primetime programs, including The 11th Hour, Deadline: White House and MTP Daily.

Gura travels widely across the United States and around the world. In recent months, his reporting has centered on the COVID-19 pandemic and its economic fallout. In Texas, he covered a surge in cases that strained Houston's hospitals. On the eve of an eviction crisis in Oklahoma, Gura profiled people who had waited months for jobless benefits.

He has anchored special coverage, often from the field. During Hurricane Dorian, he broadcasted live from the Outer Banks in his home state of North Carolina. Gura reported from Virginia Beach, Virginia, after a mass shooting at the city's municipal complex, and from El Paso, Texas, after an attack on shoppers at a Walmart Supercenter. After a gunman targeted the Tree of Life – Or L'Simcha Congregation, Gura anchored MSNBC's coverage from Pittsburgh.

For almost two years, he hosted Up with David Gura on MSNBC, a lively roundtable that aired on Saturday and Sunday mornings, featuring a motley group of guests, including lawmakers, reporters, columnists, strategists, actors and comedians. During the 2020 primary, Gura interviewed many of the Democratic presidential candidates, and he took the show on the road to the Texas Tribune Festival.

Before he joined NBC News and MSNBC, Gura was a correspondent for Bloomberg Television and Bloomberg Radio, and a contributor to Bloomberg Businessweek. He co-anchored Bloomberg Surveillance, the network's flagship morning program, and after the 2016 election, he launched Bloomberg Markets: Balance of Power, which focused on the intersection of politics and policy.

Previously, Gura was a senior reporter for Marketplace, the public radio business and economics program, and its primary back-up host. From the organization's Washington bureau, he covered budget battles, showdowns and shutdowns and the implementation of financial reform, and he also spent a lot of time on the road, looking at how legislation and regulations affect Americans beyond the Beltway.

Gura's writing has appeared in The New York Times, the Los Angeles Times, the Columbia Journalism Review and the Virginia Quarterly Review. He has been recognized by the National Press Foundation, the National Constitution Center and the French-American Foundation, and he is a term member of the Council on Foreign Relations.

An alumnus of the Columbia University Graduate School of Journalism, Gura received his bachelor's degree in history and American studies, with honors, from Cornell University in Ithaca, New York. He also studied political science in La Paz, Bolivia, at the Universidad Mayor de San Andrés and the Universidad Católica Boliviana.

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