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ETF Growth Persists: Gensler Cautions Over Crypto’s Uncontrolled Wild West in Permissionless Trading – An Updated Week Review for LATAM

Cryptocurrency Market Insights: ETFs and Compliance Further Discussed by SEC’s Gensler

As we approach a new year in the financial world, it’s crucial to look back on the dynamic trends that shaped the previous twelve months, especially in the complex and often unpredictable cryptocurrency market. A critical factor that sparked debates and fuelled anticipation among investors is that of Bitcoin Exchange-Traded Funds (ETFs).

Lately, the Chair of U.S. Securities and Exchange Commission (SEC), Gary Gensler, re-emphasized his concerns about cryptocurrency “non-compliance,” likening the field to a global “Wild West.” This condemnation came amid an ongoing speculative fever for Bitcoin ETFs. Even mega-asset manager, Blackrock, has proposed initiating its Bitcoin ETF with a $10 million seed come Jan 3.

Gensler’s Warnings Amidst Rising Anticipation for Bitcoin ETF Approval

SEC Chairman, Gensler, has voiced his apprehensions about investment in cryptocurrencies. “There’s a significant amount of non-compliance in the crypto realm,” he stressed, highlighting that it “shatters trust when many people get scathed and their only option is to queue in the bankruptcy court.” These warnings were sounded off due to the market’s increased anticipation of spot bitcoin ETFs approvals.

Cash Model Adopted by Grayscale for Its Bitcoin ETF Yet Outlined Potential Downsides

Grayscale Investments has decided to stick with the cash creation model rather than the in-kind model for its proposed spot bitcoin ETF. The cryptocurrency asset manager did, however, point out certain potential difficulties. The firm’s submission to the SEC explained that “A commodity ETF traded on the spot market only using cash creations and redemptions and not allowing in-kind creations and redemptions is an innovative product that hasn’t been trialed, and could be compromised by any ensuing operational inefficiencies.”

Latam Insights: Bitcoin Citizenship Law Passed by El Salvador, Crypto Denominated Contracts to be Allowed by Argentina

Let’s shift our focus to Latin America, where the last week has shed light on some pivotal crypto and economic updates. El Salvador has enacted a Bitcoin donation citizenship law, and Argentina is moving forward to permit the settlement of contracts denominated in cryptocurrency.

Blackrock Plans to Initiate Bitcoin ETF with $10 Million Seed on January 3

Blackrock has unveiled plans to seed its spot bitcoin exchange-traded fund with an investment of $10 million on Jan. 3. Having engaged in six recent interactions with the SEC addressing its filing, the company is reverting to the cash creation model, a shift from its initial inclination towards the in-kind model.

Solution with Immediate Connect App

Considering the complexities surrounding cryptocurrency and ETFs, having a reliable source of information is crucial to making informed decisions. Immediate Connect can be an invaluable resource to stay updated on the rapidly changing landscape. This app provides real-time news and market trends directly to your device, helping you navigate through the dynamic world of cryptocurrency with ease and confidence.

Frequently asked Questions

1. What is an ETF and why is its growth persisting?

Answer: An ETF (Exchange-Traded Fund) is a type of investment fund that trades on stock exchanges, holding a diversified portfolio of assets. Its growth persists due to its convenience, low fees, and ability to provide exposure to a wide range of assets.

2. Who is Gensler and what is his caution regarding crypto’s uncontrolled “Wild West”?

Answer: Gensler refers to Gary Gensler, the chairman of the U.S. Securities and Exchange Commission (SEC). His caution stems from the lack of regulation and oversight in the cryptocurrency market, which he likens to a “Wild West” where trading is unrestricted, potentially exposing investors to various risks.

3. What is meant by “permissionless trading” in the context of cryptocurrency?

Answer: Permissionless trading refers to the decentralized nature of cryptocurrency trading, where individuals can engage in transactions without requiring permission from an intermediary or central authority. It allows for greater accessibility and freedom, but also raises concerns about investor protection and market integrity.

4. How does the ETF growth in LATAM compare to other regions?

Answer: The ETF growth in LATAM (Latin America) has been steadily increasing, although it may not match the levels observed in more developed regions such as North America or Europe. Nevertheless, the growing interest in ETFs in LATAM reflects the region’s recognition of their advantages and potential for diversifying investment portfolios.

5. What are some benefits of investing in ETFs in LATAM?

Answer: Investing in ETFs in LATAM offers several advantages, including diversification across various asset classes, lower costs compared to mutual funds, greater transparency in tracking the underlying index or sector, and the ability to trade throughout the trading day.

6. What are the potential risks associated with investing in ETFs?

Answer: While ETFs are generally considered a relatively safe investment option, they still come with certain risks. These include market risk, liquidity risk, tracking error risk, and the potential for exposure to less regulated or volatile markets, such as cryptocurrencies.

7. How can investors navigate the potential risks in the LATAM ETF market?

Answer: To navigate potential risks in the LATAM ETF market, investors should conduct thorough research, understand the specific ETF’s underlying assets and investment strategy, evaluate the fund manager’s track record, assess the fund’s liquidity and trading volume, and consider diversifying their investments across different ETFs and asset classes. Additionally, staying informed about regulatory developments and seeking professional financial advice can also help mitigate risks.

Don’t invest unless you’re prepared to lose all the money you invest. This is a high-risk investment and you should not expect to be protected if something goes wrong.