The green light has been given. The SEC, the American financial markets watchdog, accepted in mid-January the creation of around ten exchange-traded funds (ETFs) dedicated to bitcoin. A turning point for this digital token, fifteen years old, with a relatively marginal weight in the global economy, and with a reputation weighed down by its highly speculative nature and its notoriety in organized crime. Millions of investors, institutional and individual, can now replicate the performance of bitcoin in order to improve their returns. Without actually holding any.
If the news was warmly received by the “crypto” community in perpetual search of legitimacy, the accession of bitcoin to Wall Street also represents a form of renunciation. The destiny of the token now seems to be a financial asset, notes Odile Lakomski-Laguerre, lecturer in economics at the University of Picardie Jules Verne and specialist in currency. The polar opposite of its initial desire: to offer a payment alternative to the dollar or the euro.
L’Express: Your various works on bitcoin, published in recent years, already underlined its inexorable absorption by the world of finance. His induction into Wall Street, in 2024, ultimately responds to a sort of logic…
Odile Lakomski-Laguerre: Indeed, it is one more step in the legitimization and institutionalization of bitcoin as a financial product. The process was well underway since 2017, when the Chicago Stock Exchange first authorized the possibility of trading cryptocurrencies. It was at this period that we began to speak of it as a “cryptoasset”, whereas previously, we preferred the term “cryptocurrency”. A semantic shift which already moved bitcoin away from its original vision, that of an alternative payment system.
Why does this initial promise now seem distant, despite the recognition, in recent years, of bitcoin as legal tender by El Salvador, or even more recently, the accession to power of a pro-bitcoin in Argentina?
For these countries, it is above all a political move, aiming to appropriate the very anti-system discourse of bitcoin, and to oppose the domination of the dollar over their economy. This is truly rebellious logic. But we can clearly see that it is not very economically rational, and that mass adoption by the population does not follow. We can’t force it. Monetary history shows that this process has often been the result of a very subtle interplay between political power and the sphere of merchants. However, the latter have not adopted it because there are too many constraints in terms of conversion and risks linked to the volatility of the cryptocurrency.
The financialization of bitcoin is also due to its primary characteristics: its supply is limited by its computer protocol, which makes it a rare object. If demand increases over time, its value can only increase. This is what happened, in a context of hyper-accommodating monetary policy, after the financial crisis of 2008-2009 and until 2022, due to a massive injection of liquidity. One of the main consequences has been the decline in profitability of traditional asset classes like bonds. Investors then looked for yield where they could find it, such as in cryptos. This is perhaps the fundamental error of those who created bitcoin: having placed too much emphasis on this function of store of value, to the detriment of the rest. Today, it is this dimension that is most successful.
Is he now a prisoner?
We are facing a radical innovation, which resonates with the current state of mind: rise of populism, distrust of state institutions… I think that this idea of using bitcoin as a payment system will continue. But it won’t work on a large scale, because you can’t make this type of currency work in an expanding economy with limited supply. It can coexist at the margins, with others, but there will always be one which largely dominates, for reasons of ease of use. And right now, most people have no reason to abandon their home currencies. This type of proposal may have come a little early. We are only at the beginning of the digital age. It is not impossible that others will succeed, later, in another form. But it is also not impossible that the banking system will also bounce back and build payment systems better suited to this digital world.
Are these ETFs not, ultimately, a poisoned gift for bitcoin, which finds itself a little more in the eye of the regulator and leaves its ideal aside?
It’s true, even though the story didn’t start so badly. We can very well not agree with the libertarian, anti-state aspect of bitcoin, but it denounced in its own way the abuses of the financial sphere before 2008, the excesses of capitalism. While relying on a very interesting technology, blockchain. It’s a bit of a shame now to see this innovation limited to a financial asset, when it is not one.
A bitcoin has absolutely nothing to do with a stock or a bond. There is no state or company behind it. No logic of production, of value creation. Bitcoin is a real asset, similar to a gold bar. Its financialization is symptomatic of the functioning of capitalism in which we have been immersed since the 1980s, and from which we have still not emerged. Namely a capitalism essentially driven by finance. Investment funds are authorized to offer financial products linked to an ecosystem of which we know very well that the prices and valuation are very volatile. The cryptocurrency market itself is very poorly regulated. It doesn’t work like financial markets. Large wallets hold a lot of cryptocurrencies and can, in one fell swoop, because they play on enormous volumes, massively influence prices. This is not the case in a classic financial market, run by market companies whose aim is to have a clearing house and to monitor the regularity of operations.
The crypto ecosystem could have fun doing a little casino economy, without it being damaging to the entire financial system, given that this activity still remained quite marginal and confined. Today, with ETFs, I have the impression that we are reopening Pandora’s box. And that in the end, we have learned nothing from the 2008 crisis.
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