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Even as Sam Bankman-Fried faces decades in prison at his sentencing hearing later this month, the cryptocurrency market he promoted is staging a historic comeback.
Since October, when a federal jury convicted Bankman-Fried of conducting a massive fraud, the price of bitcoin has more than doubled. The world’s leading cryptocurrency could shoot even higher next month ahead of a scheduled market event called “halving” that will reduce by half the supply of new bitcoins being produced.
Bitcoin prices have soared so high that Bankman-Fried’s old firm, FTX, which lost billions of dollars in customer funds, could ultimately pay back customers and creditors in full, based on the increased value of its investment holdings. That prospect is certain to be part of Bankman-Fried’s plea for leniency on March 28 when he faces a federal judge who could impose a sentence of barely six years or less, as Bankman-Fried has requested, or the 40 to 50 years that the feds say he deserves.
More broadly, the bitcoin boom highlights the growth of retail participation in the markets. A new generation is being drawn into speculating on stocks, options and alternatives like crypto, which are digital files created as artificial currencies and traded on electronic platforms worldwide. The boost in activity stems from a combination of temptingly rising prices, new smaller-scale products and technology that makes accessing the markets as simple as making a phone call.
We’ve pushed for stronger rules and greater transparency in the crypto market, which we consider full of potential as well as peril. Established exchanges and trading firms are just beginning to bring order to what was a free-for-all. If cryptocurrencies were a crying baby at this point last year, they have developed into a willful toddler that’s finally getting some adult supervision.
A welcome milestone occurred in January when cryptocurrencies became available as exchange-traded funds. ETFs are common investments these days and subject to sensible regulations. So even though the underlying crypto is still a wild card, it’s a blessing to see responsible “big kids” like Chicago’s CME Group and Cboe Global Markets playing in the same sandbox.