Regulators often resist financial innovation in the hope of reducing the uncertainty in investing, CryptoNews writes. It is not by chance that Gary Gensler, the SEC chair, recently associated SPACs and bitcoin when he spoke of the need for better investor protections. As with SPACs, regulatory moves to restrict the use of bitcoin and other cryptocurrencies have probably contributed to prices falling lately (along with other worries such as Bitcoin’s carbon footprint).
And that’s not all SPACs and bitcoin have in common. Bitcoin is e-money that can circulate pseudo anonymously among infinite users without needing banks or a central issuing authority. But these potential benefits depend on enough users accepting it as a store of value. To paraphrase something said of currencies in general, bitcoin is like a religion, based on faith.
The same is true of SPACs, in that public investors entrust the management to find a suitable takeover target. And both bitcoin and SPACs disrupt the common wisdom around an established financial practice. While bitcoin is a new way of exchanging value, some have described SPACs as the second coming of the IPO. Read more.
