The Flying Frisby - money, markets and more Game Over for Bitcoin Treasury Companies?
The UK Financial Conduct Authority has announced that it is loosening its anti-bitcoin stance. From October 8th retail UK investors will now be able to buy bitcoin ETFs.
Finally.
The ban came in with bitcoin at $5,000. Today it's $115,000. That’s $110,000/coin UK investors have been protected from. Great job guys.
Where will it be on October 8th? Who knows.
Does this announcement mark the top of the market for bitcoin? There would be a poetic irony if it did, but it won't. Bitcoin is so much bigger than the FCA.
At present, it does not even look like a case of buy the rumour, sell the news. Bitcoin has actually sold off a few percent since the announcement.
But this change in tack is going to have a huge impact. It's about a lot more than British retail investors. It's global.
It's going to have an impact on the bitcoin treasury companies around the world, and it's going to have an impact on the bitcoin price itself.
Here’s why.
We’ll start with the announcement itself from David Geale, executive director of payments and digital finance at the FCA:
'Since we restricted retail access to cETNs, the market has evolved, and products have become more mainstream and better understood. In light of this, we're providing consumers with more choice, while ensuring there are protections in place. This should mean people get the information they need to assess whether the level of risk is right for them.'
Blah blah, waffle waffle.
Absolutely no ownership of the FCA's calamitous regulation whatsoever.
Fortunes have been lost to British investors because of the FCA. How is it these bodies are so totally unaccountable? Perhaps everyone who was involved in that decision should be made to compensate British investors for their loss of earnings.
"We're providing consumers with more choice,". Please. There's gaslighting for you right there.
Moving on.
NB Don’t forget my brilliant book about bitcoin, if you want to learn more about the space.
There is also my new book The Secret History of Gold, which comes out later this month. Amazon is currently offering a discount, so order yours now.
Obviously, UK investors are now going to be able to buy bitcoin ETFs through their brokers, which means we can hold them in our SIPPs and ISAs. I gather there is roughly £3 trillion in UK pensions, £750 billion in ISAs, £500 billion in SIPPs and quite a bit more in other brokerage accounts. So that is a lot of capital that can now come into bitcoin which previously could not.
But there is a lot more to it than that.
The institutional floodgates are about to open.
Former HSBC fund manager and ByteTree CEO, Charlie Morris, who knows this world as well as anyone, has this to say.
The lifting of the ban by the UK regulator of bitcoin exchange traded products will have a far greater impact on the market than many believe. It's not just retail but institutions too. Many funds around the world are connected to London whether it be custodians, administrators, distribution, or trade execution. The ban meant that a single touchpoint with the UK would prevent allocation to bitcoin. From 8 October, this will no longer apply. Not only will U.K. retail investors boost demand for bitcoin ETPs, but a far bigger deal will be the opening up to institutions and funds around the world. It's a monumental moment for bitcoin which will become a global institutional asset over the next decade.
(By the way you should subscribe to Charlie's newsletters. They're excellent. There are free and paid options. Here's the link).
You saw my piece a few weeks ago about the global shadowbanning of bitcoin. London and the FCA had a huge role to play in that. One example: a banker I know in Zurich could not buy bitcoin products for one of his high net worth clients because of the ban. He was by no means alone. We have taken a step forward to the lifting of the shadowban, though not the final step by any means. As we noted, the funds buying bitcoin are still the 'pirates' rather than the big players, but this is still a move towards the legitimisation and normalisation of bitcoin.
If bitcoin can get to something like 2% of portfolios worldwide, which it eventually will, well woof is all I can say.
What about the treasury companies? What next for them?