Finance
Spot ETPs: A New Era For Bitcoin Or A Gateway For Traditional Finance?
On January 10, 2024, the crypto industry witnessed a notable development. The U.S. Securities and Exchange Commission (SEC) approved the listing and trading of several spot Bitcoin Photo by Muhammad Asyfaul, Unsplash
BTC
A bit of history
The SEC categorises most crypto assets as investment contracts, making them subject to U.S. securities laws. Consequently, issuing crypto assets requires compliance with significant regulatory requirements, a hurdle too high for many start-ups and even established companies in the crypto industry. It is crucial to acknowledge the presence of numerous fraudsters in the crypto market, and thus, the need for the SEC to become more diligent and strict. However that being said, it is important to emphasize that every novel sector invariably draws in those looking to exploit its nascent state for illicit gain. This pattern is not new; even the securities market, now well-regulated, took decades to establish robust regulations. This lengthy process of regulation and oversight development is a common trajectory for emerging industries as they balance innovation with the need to deter and manage fraudulent activities.
However, one must question the fairness of a regulatory approach that permits established industries to take over an emerging sector, just right before it becomes truly viable.
Introducing Bitcoin ETF and ETP
According to Coindesk, Bitcoin ETFs are publicly traded investment funds that allow investors to invest in Bitcoin without owning the actual crypto asset. This setup frees the investors from dealing directly with the crypto regulation. The ETFs are traded on traditional securities exchanges, and investors buy shares in a fund that holds Bitcoin. While there have been many attempts to launch crypto-linked ETFs since 2014, the first U.S. Bitcoin ETF (BITO) began trading on October 19, 2021. ProShares, a well-known ETF issuer, was allowed by the SEC to create this fund. The fund debuted as one of the most heavily traded ETFs in market history, attracting more than $1 billion in assets within its first days.
In January 2024, the BITO reached its all high of over $2 billion assets.
Although the SEC approved a few Bitcoin ETFs, in 2023, it rejected the applications to list spot Bitcoin exchange-traded product (ETP). The main difference between the two is that the Bitcoin spot ETP invests directly in Bitcoins as an underlying asset, whereas the Bitcoin futures ETFs invest in derivatives contracts based on Bitcoin prices.
One could ask – what is the difference between the Bitcoin spot ETP and owning the Bitcoin directly? On a very basic level, the first is regulated and in the majority of cases, managed by established financial entities, and the other is not, while the underlying asset is the same – Bitcoin.
Allowing for the Bitcoin spot ETP
The first application for Bitcoin spot ETP was filed with the SEC on July 1, 2013, by the Winklevoss brothers. Since then, multiple applications have been filed under the federal securities regulation, all rejected by the SEC on grounds of anti-fraud and investor protection. Meanwhile, the SEC permitted derivative products – the Bitcoin ETFs, creating a noticeable double standard. This inconsistency was finally challenged by Grayscale Investments, LLC in 2022. On August 29, 2023, the DC Circuit Court of Appeals ruled this double treatment as “arbitrary and capricious,” criticizing the SEC for failing to “ explain its different treatment of similar products.”
The SEC did not appeal this decision and instead initiated a review of 11 applications for Bitcoin spot ETPs.
What does this mean?
The SEC approved 11 applications for spot Bitcoin ETPs, and entities such as Blakcrock, Grayscale, Fidelity, VanEck, ARK 21Shares and others, allowing them to invest in Bitcoin and create derivative products for retail investors. This decision culminated in a significant trading volume of $4.6 billion – on the first day of trading – January 11, 2024, indicating a strong market interest.
This situation underscores the need for the SEC to rethink its approach to regulating crypto assets. The current stance is somewhat paradoxical. The SEC imposes strict limitations on primary crypto activities and innovative start-ups, often suggesting a view of crypto activities as potentially fraudulent. Yet, simultaneously, it facilitates secondary trading through established financial institutions. This implies that only a select few are deemed capable of safely engaging in the crypto market.
The SEC’s approach of creating space for traditional financial entities in the crypto space while tightly constraining grassroots crypto activities points to an unusual standard of operation that may need reevaluation to ensure a more balanced and inclusive market.
The Reserve Bank of Australia has conformed to expectations and decided to lift the official cash rate. It is the third successive interest rate hike this year as the bank tries to suppress expectations of runaway price inflation in the economy and subsequent wage increases.
The RBA opted for a standard 0.25 hike, which takes the official cash rate to 4.35 per cent. After hikes in February and March, it now completely erases all the rate cuts following the hiking cycle in response to Covid-driven inflation.
The official cash rate last sat at 4.35 per cent 16 months ago.
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The hike in March was a close call, with five Board members in favour and four against. This time, it was a very different story.
Only one Board member voted to hold rates steady today, with eight voting for the hike.
“There are early signs that many firms experiencing cost pressures are looking to increase prices of their goods and services. Short-term measures of inflation expectations have also risen,” the RBA Board warned in its accompanying Monetary Policy Statement on Tuesday afternoon.
“Developments in the Middle East are having an impact on inflation. Higher fuel prices are adding to inflation and there are indications that this is likely to have second-round effects on prices for goods and services more broadly. This inflation impulse is in addition to the high inflation recorded around the start of 2026, reflecting capacity pressures in the economy.”
The RBA pointed to huge uncertainty in the Middle East and said a protracted conflict would mean inflation will likely get worse before it gets better.
“A longer or more severe conflict could put further upward pressure on global energy prices; this would push up near-term inflation and could also increase inflation further out as these costs are passed through,” it said, adding this scenario risks price rises getting “built into longer term inflation expectations”.
“Higher prices and prolonged uncertainty may cause growth to be lower in Australia’s major trading partners and also in Australia,” the statement said.
That confluence of factors has some economists worried about us entering into a period of stagflation.
Average mortgage holder paying $3,200 more
Today’s hike will take the average owner-occupier variable home loan rate to 6.26 per cent.
Why did you choose to attend Bentley?
I wanted to find a school that allowed me to combine both business and language.
I grew up working in my family’s restaurants in Western Mass., so I have been surrounded by business from an early age. As I got older and started working more intensely in this environment, I developed a real passion for the ins-and-outs of business.
On top of that, my grandparents are Chinese immigrants, so the Chinese culture has always played a big role in my life. Since I studied Mandarin Chinese starting in kindergarten, the ability to continue that at college was non-negotiable. When I toured Bentley, it all clicked and felt as though I’d be able to pursue all my interests to their fullest extent.
What stood out about the Language, Culture and Business major, and Finance minor?
What really drew me to Bentley’s Language, Culture and Business major was that it wasn’t just language studies — it also highlighted global perspectives and how to adapt to a highly globally connected business environment. At the same time, I was interested in the analytical and strategic side of business, which led me to the Finance minor.
Together, I believe they allow me to approach business problems and solutions from both a quantitative and human-centered perspective. My finance background gives me the technical foundation to analyze performance and then make strategic decisions, while Language, Culture and Business has helped me understand the people and environment that those decisions impact.
Are there specific Bentley professors or classes that helped you connect the dots between finance and culture?
Yes, several of the required courses for my Language, Culture and Business major really helped me understand how cultural context influences economic behavior, negotiation styles and decision-making. Pairing these skills with my finance courses allowed me to think more critically about how financial strategies play out in global markets and where cultural nuances can directly impact outcomes.
If I were to choose what course has impacted my choices the most, I would say Chinese for Business I (MLCH 201) and Chinese for Business II (MLCH 208) taught by Fei Yu, assistant professor of Modern Languages. I thoroughly enjoyed taking these courses because they made me realize that language can be applied to so many industries and made my aspirations to work internationally seem possible and within reach. I also gained important skills such as interview skills and resume skills.
At Bentley, there’s a strong culture of encouraging students to explore multiple interests and see how they connect for future careers.
Were there other campus experiences that helped blend your cultural and business interests?
Yes — being involved in organizations such as the Women’s Leadership Program and the Bentley Dance Team helped me work with diverse groups of people and develop strong interpersonal skills. Additionally, studying abroad in Florence, Italy, made me comfortable with change and sparked a new fire to continue learning about cultures other than my own.
It doesn’t seem to make a lot of sense, does it? Someone decides to go to war, the oil stops flowing, prices go up and our economy starts shutting down.
The best response we can come up with is to raise interest rates, to dampen demand a little more. As if doubling the price of petrol won’t do that enough.
Problem is, raising interest rates only hurts people with mortgages and renters, typically not high on the wealth ladder. People with no debt get more money, and will spend it. And the rising interest rates hurt the businesses that have already been hit. Just when we want to raise supply.
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Besides interest rates, standard macroeconomic thinking is there’s only one other lever. We could reduce net government spending, which is hard to do when you’ve just cut taxes on diesel and petrol, which will fuel demand just when you don’t want that to happen.
But there may be a third way. To our collective credit, Australia has set up what many regard as the world’s best superannuation system. As at December 2025, we had close to $4.5 trillion set aside for our futures. And, every hour of every day, 12% of our income is added to the pile.
It’s been suggested that the super guarantee levy might be used as the third ‘lever’ to modulate the economy, in addition to fiscal and monetary policy.
This was actually one of the arguments used when the levy was introduced back in 1992. Instead of giving workers a wage rise, which might trigger wage-inflation, Bill Kelty and Paul Keating negotiated a compulsory savings scheme. Workers would benefit, but not immediately.
Perhaps it’s worth revisiting that negotiation. Say you want to set the levy at 12% over the long term. When times are tough you might put the 12% rate down a little to stimulate the economy. Instead of a $100 wage and $12 in super, people get $102 for now and $10 for later. We get through.
Or, when inflation is running you might nudge the 12% up a little to constrain demand. The extra isn’t paid by business. Instead of the $100 wage and $12 in super, people get $98 for now and $14 for later. Given the cost of living crisis, maybe the lever only cuts in above a certain income.
This would arguably be fairer, easier and more effective than the interest rate sledgehammer. It would inject or remove the same amount of money from the economy. But the pain is spread, people keep their own money rather than paying it to the banks, and businesses aren’t hit by higher interest rates just when you want them to invest in their capacity.
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