For 15 minutes, the cryptocurrency industry was euphoric.
On Tuesday at 4:11 p.m., the Securities and Exchange Commission’s official X account announced that regulators had approved a new investment product tracking the price of Bitcoin, an apparent victory for the embattled crypto industry. Coinbase, a giant crypto exchange, posted a celebration banner. Crypto fans hailed it as a historic day for the industry.
Then at 4:26 p.m., Gary Gensler, the chairman of the SEC, job that the agency’s account had been compromised, resulting in an “unauthorized tweet.” An SEC confirmed the hack in an emailed statement.
The security breach marks the latest twist in the crypto industry’s years-long search for an investment vehicle known as exchange-traded funds tied to the price of Bitcoin. Since the fall, crypto enthusiasts have been counting down the days until the January 10 deadline for the SEC to decide whether to authorize a Bitcoin ETF. The price of Bitcoin has risen more than 60% in recent months, driven by growing optimism that approval is imminent. .
An announcement was widely expected this week, with major financial firms like BlackRock and Fidelity set to launch Bitcoin products. On social media, speculation raged about the exact timing of an approval, inspiring memes about the SEC’s once-obscure procedures and propelling ETF analysts to online stardom.
But the industry will have to wait.
“The SEC has not approved the listing and trading of Bitcoin spot exchange-traded products,” Mr. Gensler wrote in his post.
An ETF is a basket of assets whose shares trade on traditional exchanges like Nasdaq. Investors in a Bitcoin ETF would own part of a basket containing Bitcoin, sparing them some of the risks and drawbacks associated with purchasing cryptocurrencies directly.
Crypto enthusiasts have long hoped that approval of the financial product would attract billions of dollars of new investment into the sector, attracting wealth managers who in the past had been reluctant to invest their clients’ money in the cryptography.
For years, the SEC resisted the industry’s entreaties, arguing that the crypto market was ripe for manipulation. But in August, the agency lost a legal battle with one of the companies hoping to propose the Bitcoin fund, paving the way for its approval.
This legal victory was a rare bright spot in a dark time for the crypto industry. Since mid-2022, cryptocurrency prices have collapsed and several large companies have filed for bankruptcy, leading to criminal charges. Mr. Gensler has led the charge against the industry, filing lawsuits against high-profile companies like Coinbase and its biggest international rival, Binance.
So the crypto industry was ready to celebrate when the social media post was posted on the SEC’s official X account on Tuesday afternoon. A short statement appeared above a thumbnail image of Mr. Gensler.
“Today, the SEC approves the listing of Bitcoin ETFs on all registered national securities exchanges,” the message said. “Approved Bitcoin ETFs will be subject to ongoing monitoring and compliance measures to ensure continued investor protection.”
The price of Bitcoin briefly climbed to nearly $48,000, before moving closer to $45,000 following the SEC’s hack announcement.