February 01, 2024 07:27 am | Updated 08:23 am ISTThe launch of U.S. exchange-traded funds (ETFs) tracking bitcoin deepens ties between the volatile world of cryptocurrencies and the traditional financial system, potentially creating unforeseen new risks, some experts say. The Securities and Exchange Commission (SEC) this month approved 11 spot bitcoin ETFs from issuers, including BlackRock and Invesco/Galaxy Digital, in a watershed moment for a crypto industry dogged by bankruptcies and crime. Others said last year’s U.S. banking upheaval showed that financial and crypto markets can transmit risks to one another. Bitcoin ETFs could “particularly exacerbate” that volatility in times of market stress, and other channels through which ETFs can create systemic risks, said Antonio Sánchez Serrano, principal economist at the European Systemic Risk Board, the EU’s financial risk watchdog. “The differences with a plain-vanilla stock ETF are simply too large in terms of embedded risks,” Serrano wrote in an email to Reuters, referring to bitcoin ETFs, which he classified as complex.

Source: The Hindu February 01, 2024 14:08 UTC