“The SEC has determined that there was unauthorised access to and activity on the @SECGov x.com account by an unknown party for a brief period of time shortly after 4 pm ET,” the regulator’s spokesman said in an emailed statement.
“That unauthorised access has been terminated. The SEC will work with law enforcement and our partners across government to investigate the matter and determine appropriate next steps relating to both the unauthorised access and any related misconduct.”
The price of bitcoin fell nearly 6 per cent to around $US45,000 ($67,130) on the news, after initially rallying 1.5 per cent. It was trading around $US45,954 by Wednesday afternoon. The token had surged to a 21-month high of more than $US47,000 the previous day amid growing optimism that the SEC’s approval of the ETFs was imminent.
Investors have been eagerly awaiting the SEC’s decision this week on whether a spot bitcoin ETF would be approved for launch in the US.
Major financial institutions including Greyscale, Blackrock and Fidelity have submitted applications to the SEC requesting permission to roll out securities that are linked to the bitcoin price for retail investors.
Standard Chartered Bank has predicted more than $US1 billion would inflow into the new products over the next three months if approved, and more than $US100 billion by the end of the year.
Regulatory clarity
As it stands, regulation around bitcoin and other cryptocurrencies is unclear. But demand for the currency has surged recently, as investors look for ways to diversify investments and sometimes circumvent fiat currencies in troubled economies.
The US-based financial institutions have argued that a spot bitcoin ETF, which would trade on the stock market like any other stock, would remove the technical risk of individual investors managing private keys and complicated cryptocurrency wallets.
BlackRock, the world’s largest asset manager, has named Jane Street and JPMorgan as the broker-dealers who will be responsible for steering cash into and out of its spot bitcoin ETF.
Notwithstanding the confusion around the SEC’s compromised social media account on Wednesday, much of the market has anticipated the SEC will approve a spot bitcoin ETF.
Earlier this week, BlackRock and Fidelity released their anticipated customer fees. BlackRock has said its fees start at 0.2 per cent for the first 12 months until the fund hits $US5 billion. Then the fees will lift to 0.3 per cent.
Fidelity has said it will charge a 0.39 per cent fee.
The SEC, which was working to a January 10 (January 11 AEDT) deadline, could approve as many as 13 companies’ applications.
Other firms like Invesco and Galaxy have also submitted ETF applications, but have said they will not charge any fee for the first six months, then will implement a 0.59 per cent fee.
The bitcoin price surged 155 per cent during the last quarter of 2023. Much of this enthusiasm was driven by the anticipated ETF approval, but investors are also looking ahead to the bitcoin “halving” event.
Every four years, the decentralised network automatically and irreversibly halves the amount of Bitcoin miners can earn from fixing blocks of verified transactions to the Bitcoin ledger.
After halving, bitcoin miners will be rewarded half as many tokens for their efforts and the total supply of bitcoins in circulation is curtailed.
This mechanism is intrinsic to bitcoin’s design to combat inflation and preserve its value over time.
Hacks and theft are common throughout the cryptocurrency ecosystem. Some major crypto investors have called for the SEC to be investigated for market manipulation.
