For 15 minutes, the cryptocurrency industry was euphoric.
On Tuesday at 4:11 p.m., the official X account of the Securities and Exchange Commission announced that regulators had approved a new investment product that tracks the price of Bitcoin, an apparent victory for the embattled crypto industry. Coinbase, a giant crypto exchange, posted a festive banner. Crypto fans called it a historic day for the industry.
Then at 4:26 p.m., Gary Gensler, the chairman of the SEC, said: Posted that the agency’s account had been compromised, resulting in an “unauthorized tweet.” An SEC spokeswoman confirmed the hack in an emailed statement.
The security breach was the latest twist in the crypto industry’s years-long push for an investment vehicle known as an exchange-traded fund tied to the price of Bitcoin. Since the fall, crypto enthusiasts have been counting down the days until a January 10 deadline for the SEC to decide whether to allow a Bitcoin ETF. Bitcoin’s price has risen more than 60 percent in recent months, driven by increasing optimism that an approval was imminent. .
An announcement was widely expected this week, with major financial companies like BlackRock and Fidelity set to launch Bitcoin products. Speculation rages on social media over the exact timing of an approval, inspiring memes about once-murky SEC proceedings and making ETF analysts famous online.
But the sector will have to wait.
“The SEC has not approved the listing and trading of spot bitcoin exchange-traded products,” Mr. Gensler wrote in his message.
An ETF is a basket of assets where shares are traded on traditional stock exchanges such as the Nasdaq. Investors in a Bitcoin ETF would own part of a basket of Bitcoin, saving them some of the risks and inconveniences associated with purchasing cryptocurrencies directly.
Crypto enthusiasts have long hoped that the approval of the financial product would attract billions of dollars of new investment into the sector, attracting asset managers who had in the past hesitated to put client money into crypto.
For years, the SEC resisted the industry’s requests, arguing that the crypto market was ripe for manipulation. But in August, the agency lost a legal battle with one of the companies that hoped to offer the Bitcoin fund, paving the way for its approval.
That legal victory was a rare bright spot in a bleak period for the crypto industry. Since mid-2022, crypto prices have collapsed and several major companies have filed for bankruptcy, leading to criminal charges. Mr. Gensler has led the charge against the industry, filing lawsuits against prominent companies like Coinbase and its biggest international rival, Binance.
So the crypto industry was ready to celebrate when the social media post was published on the SEC’s official X account late Tuesday afternoon. A short statement appeared above a thumbnail image of Mr. Gensler.
“Today, the SEC grants approval for Bitcoin ETFs to list on all registered national securities exchanges,” the post said. “The approved Bitcoin ETFs will be subject to ongoing monitoring and compliance measures to ensure continued investor protection.”
Bitcoin’s price briefly skyrocketed to nearly $48,000 before falling closer to $45,000 after the SEC announced the hack.