In early January, the Securities and Exchange Commission (SEC) made it easier to own Bitcoin, by approving spot Bitcoin ETFs. This put a smile on some faces but is causing furrowed eyebrows on others.1 Some investors have wanted a way to buy and sell Bitcoin as easily as they trade stocks. Critics have been concerned that widespread ownership of crypto may introduce too much risk and volatility into investment portfolios, especially retirement accounts.2 Owning a stock entitles you to a portion of a company’s future profits while bonds provide interest payments and return of capital upon maturity. Bitcoin doesn't offer either one of these. To expect a positive return from digital currency, you have to hope someone will be willing to pay them more for the coins in the future than what you paid. Warren Buffett, one of the loudest Bitcoin critics, has said, “Something like Bitcoin, it is a gambling token that doesn’t have any intrinsic value.”³ JP Morgan Chase Chief Executive Officer Jamie Dimon shares that sentiment, saying, “I call it the pet rock.” Dimon, in early January, said he’s done even talking about Bitcoin.⁴ Cryptocurrencies also lack regulatory and investor protection structures, which is important to keep in mind if you are considering adding Bitcoin to your investable assets. Bitcoin proponents point out that digital currency has a limited supply and believe that the lack of regulation by any government or central bank oversight is a positive.⁵ Only time will tell, but a thoughtful approach can help you decide if any new investment opportunity, like cryptocurrency, belongs in your portfolio or should be avoided, like the latest fad. ETFs are sold only by prospectus. Please consider the charges, risks, expenses, and investment objectives carefully before investing. A prospectus containing this and other information about the investment company can be obtained from your financial professional. Read it carefully before you invest or send money. |
1. WSJ.com, January 10, 2024. “SEC Approves Bitcoin ETFs for Everyday Investors.” |
SEC Approves Bitcoin ETFs
