Trading volume on newly approved spot Bitcoin ETFs soared past $5 billion Friday in the second full day since launch — even as SEC Chairman Gary Gensler warned investors to think twice before pouring money into the crypto product.
After years of wrangling over their legality, the SEC approved 11 of the exchange-traded funds this week, including products offered by investment giants Blackrock, Fidelity and Grayscale.
The approvals were seen as a major win for crypto touts who wanted to open the asset to a wider pool of investors.
By buying into the ETFs, investors are acquiring stakes in funds that own bitcoin, rather than buying the tokens themselves.
Gensler indicated he remains highly skeptical of cryptocurrencies during an appearance on CNBC’s “Squawk Box” on Friday.
“Investors should be aware that the underlying asset is a highly speculative, volatile asset,” Gensler said. “Amongst its use cases is really for illicit activity – money laundering and sanctions and ransomware and the like.”
The SEC chair said his agency determined that approval of the ETFs was the “most sustainable path forward,” but nevertheless stressed that the SEC does not approve or endorse “bitcoin itself” as an asset.
“It’s a speculative, volatile store of value. Is it being used as a payment anywhere? Are we buying cups of coffee with it? Not really. The only payment mechanism it’s being used for in a primary sense is illicit activity,” Gensler added.
Trading activity topped $900 million in early trading Friday after the ETFs debuted with approximately $4.6 billion in volume a day earlier, The Block reported, citing Reuters and Yahoo Finance data.
Other Wall Street firms are taking a wait-and-see approach to the ETFs, which have been called a high-risk investment by critics other than Gensler. Asset management giant Vanguard will not offer the ETFs to their clients.
Merrill Lynch, Edward Jones and Northwestern Mutual also do not have immediate plans to offer the 11 approved ETFs, Fox Business reported.
Elsewhere, South Korea’s Financial Services Commission warned local investors that the US bitcoin ETFs may violate the its domestic laws on digital assets.
The price of bitcoin spiked above the $46,000 threshold following Wednesday’s ETF approvals — its highest level since December 2021.
The gains had pared somewhat by Friday, with bitcoin down nearly 6% to $44,502 as of the late morning, according to Coinbase data.
Eric Balchunas, a senior ETF analyst at Bloomberg, described the first day of bitcoin ETF as a “huge success.”
“By all metrics: volume, # of trades, flows, media coverage it was smashing success, historical,” Balchunas wrote on X. “And that was DESPITE limited platform availability.”