Crypto hater Gary Gensler strengthens his resolve by supporting the investment world’s ‘Wild West’

charles gasparino

work

by charles gasparino

So Gary did it. Last week, the head of the Securities and Exchange Commission, a well-known cryptocurrency hater who has criticized digital coins, even calling the market filled with looters, drug dealers and scammers the “wild west” of investing, said: , has taken a big step towards virtual currency. Mainstreaming virtual currencies as an asset class.

On Wednesday, the SEC finally approved the sale of an exchange-traded fund that tracks the “spot” price of Bitcoin. ETFs, of course, are baskets of securities that often track an underlying index or investment style. It is becoming increasingly popular among small investors who do not want to own stocks outright. If buying Apple in bulk is too expensive, you can become his Apple investor and buy his ETF that holds that stock at marginal cost.

for a small fee

Bitcoin ETFs work similarly. You don’t have to put down a lot of cash to own Bitcoin as it follows the daily price of Bitcoin. You can seamlessly buy a piece of this wicked crypto casino by simply calling your broker or using the Robinhood app.

And like I said, it’s cheap. The price of one Bitcoin is approximately $43,000. It’s not the amount of money that ordinary people like Aunt Milly are sleeping on. Now, she can get a portion of it for a small management fee (as low as 0.2%) and without the hassle of buying fractional shares.

For a few basis points, Aunt Millie can do her part to facilitate fluidity in the global drug trade.

All kidding aside, if cryptocurrencies are so bad, why did Gary Gensler go there? I have my theory.

First, drug dealers use cryptocurrencies such as Bitcoin for transactions, but they also use dollars. There are many ways to fund illegal activities outside of the U.S. banking and suspicious activity reporting systems. Gensler has been in banking for a long time, and no matter how much he hates cryptocurrencies, he knows this.

Plus, he probably didn’t have a choice. I’m not a crypto guy, but for all the problems in this market, it’s not going away. The court blocked some of his regulatory crackdowns. Digital coins also survived the crypto winter. Bitcoin has fallen from near $69,000 to below $17,000, and some believe it could soon rise to a high of $69,000.

The cryptocurrency survived the FTX crash, the fraud, arrest, and imprisonment of its founder, Ultimate Cryptocurrency Bro Sam Bankman Fried. This mini-Madoff, known as “SBF,” stole customers’ digital assets from exchanges to gamble on his failed sideline at a cryptocurrency hedge fund.

If digital currencies didn’t exist, you would think that the demise of FTX would mark the final grand finale for this asset class, but that didn’t happen. Additionally, allowing ETFs to trade on the Nasdaq and New York Stock Exchanges is the best way for Gary and his peeps to monitor the situation and keep investors away from a future Bankman Freeze. That would be the method.

I think the biggest reason is that Gary Gensler is no match for Larry Fink. In case you didn’t notice, BlackRock, the world’s largest asset management company, is one of 11 companies offering the new ETF. Fink, the founder and CEO of BlackRock, was once a crypto skeptic like Gensler. He’s gone. Over time, he came to see cryptocurrencies as “stores of value,” comparable to the long-held status of gold.

Yes, those are his words.

Take my word for it, Fink thinks there’s a decent money-making opportunity. Normalizing Bitcoin through ETFs could at some point normalize Bitcoin as an asset class for financial advisors. If that happens, BlackRock’s ETFs, which have very close ties to major brokerages, will be among the first to benefit when a typical weighted portfolio of stocks and bonds also includes cryptocurrencies.

Once Mr. Fink went all-in on Bitcoin ETFs, the pressure on Mr. Gensler was enormous. Mr. Fink has become a political lightning rod in recent years for his support for environmental, social, and governance (ESG) investing.

His critics forget what got him here. He has built the world’s largest asset management firm, which he started from scratch more than 30 years ago, into his $10 trillion business, and has connections throughout Washington, D.C. and on both sides. (He was Donald Trump’s money manager). Additionally, he has on speed dial the people Gensler reports to in President Biden’s White House.

Rescue Shari?

About a month ago, I reported that Shari Redstone was desperately seeking an exit from her troubled media empire, Paramount Global. She will do so by selling her controlling shareholder, National Amusements, rather than the entire company.

Interested buyers included Redbird Capital and Skydance Media, owned by David Ellison, son of Oracle founder Larry Ellison. They had all signed NDAs. Shari wanted to preserve his family’s wealth for future generations as legacy media businesses slowly disintegrated (National Amusements was the brainchild of his late father, media tycoon Sumner Redstone). . She hoped to get about $2 billion and move on with her life.

What’s different today? There are numerous reports that she is buying up her own stock and that her stakeholders are signing NDAs. Sorry guys, but that’s not real news. The news explains why it’s so hard to find buyers for legacy media assets these days.