Penned by Georgetown business professor Jim Angel, the article is almost as alarmist as it is pessimistic.
While he writes that “Informed investors should be allowed to make their own investment decisions without interference from a nanny-state government,” Angel nevertheless argues that investors should be denied the opportunity to decide to invest in Bitcoin ETFs. The reason, he says, is that Bitcoin ETF applications have not disclosed that “criminal activities are the primary use of Bitcoin.” Unfortunately, Angel doesn’t cite any evidence for this proposition, just some personal anecdotes.
No doubt there are illicit uses of Bitcoin, but as law enforcement officials have said time after time, it’s a challenge they are more than capable of meeting. While Angel says that “Bitcoin is a payment system ideally suited to the black market,” I think the dozens of criminals now behind bars because law enforcement used Bitcoin’s blockchain to track them would disagree. Bitcoin is not as anonymous as is often portrayed. And it certainly isn’t the cause of ransomware as Angel implies.
If every company whose products were used illicitly by criminals had to disclose as much in their securities filings, drug companies might have to state that a large proportion of pain killers end up on the black market, banks would have to disclose how their accounts are routinely used by criminals to launder billions of dollars, and maybe even car companies would have to say that their vehicles are used for getaways. It’s not clear retail investors would be any better denied the opportunity to invest in drug companies, banks, or auto firms because they don’t disclose this on SEC forms, but that’s what Angel suggests for Bitcoin ETFs.
The advent of the Internet led to rampant piracy, the proliferation of porn and illegal gambling, easier criminal communications, anonymous harassment, as well as new kinds of confidence scams. Could you imagine if the government in the early 1990s took advice like that of Mr. Angel? Advice that amounts to, “Please look only at the potential costs of this technology and ignore all the potential benefits because they’re too unproven and uncertain.” (That advice might have looked a little like this.) We would be much, much poorer today.
Luckily the government then dismissed techno-pessimists like Angel and, at the time, Newsweek columnist Clifford Stoll, who wrote this timeless piece in 1995. Instead the federal government adopted the optimistic view that we could embrace the promise of technology while mitigating its risks where needed. This was the basis for the Clinton Administration’s policy toward the Internet, and it should be what guides the SEC as it makes its decisions on Bitcoin ETFs.