Spot Bitcoin ETF Warnings by Ex-SEC Official
Former U.S. Securities and Exchange Commission (SEC) official John Reed Stark, who is currently the president of cybersecurity firm John Reed Stark Consulting, recently issued a warning about spot bitcoin exchange-traded funds (ETFs). In a post on social media platform X, Stark expressed his skepticism and cautioned against the approval of spot bitcoin ETFs. He believes that such ETFs would not only create another Wall Street investor scam but also become one of the most centralized crypto mechanisms ever conceived.
Background of John Reed Stark
John Reed Stark is a well-known figure in the field of securities and enforcement. He served as the chief of the SEC Office of Internet Enforcement for 11 years and worked as an SEC enforcement attorney for 15 years. With his extensive experience, Stark's insights carry weight and provide valuable perspectives on regulatory matters.
The Laughable Concept of Bitcoin Spot ETFs
Stark finds the idea of a bitcoin spot ETF to be laughable. He strongly believes that the approval of such a financial instrument would only serve to create yet another fee-sucking scam on Wall Street. The potential negative impact on investors could be of epic proportions. Furthermore, Stark argues that a bitcoin spot ETF would represent a highly centralized crypto contraption, raising concerns about the essential principles of decentralization that cryptocurrencies were built upon.
SEC's Review of Spot Bitcoin ETF Applications
Currently, the SEC is reviewing 13 applications for spot bitcoin ETFs. Last week, the regulator held meetings with several applicants and requested them to file amendments to their filings by the end of the week. Additionally, the SEC advised the applicants to adopt the cash-creation method instead of the in-kind creation method. Blackrock, the world's largest asset manager, initially advocated for the in-kind model but failed to convince the SEC. Consequently, the firm has now adopted the cash method for its latest filing.
Likelihood of Approval and Gensler's Legacy
Based on the reports of meetings between SEC officials and spot bitcoin ETF issuers, as well as discussions on the cash creation method, Stark believes that the approval of some form of bitcoin spot ETF by the SEC seems probable. He finds it peculiar that the approval of such an ETF might become a significant aspect of SEC Chair Gary Gensler's legacy. Stark, like many in the crypto community, questions the rationale behind this potential development and hopes it does not come to pass.
In conclusion, former SEC official John Reed Stark has expressed serious concerns about the approval of spot bitcoin ETFs. He believes that such ETFs would create a detrimental environment for investors and undermine the decentralized nature of cryptocurrencies. As the SEC continues its review of spot bitcoin ETF applications, the industry awaits the regulator's decision and its potential impact on the crypto market.
What are your thoughts on John Reed Stark's statements? Share your opinions in the comments section below.
Frequently Asked Questions
What are the pros and cons of a gold IRA?
The main advantage of an Individual Retirement Account (IRA) over a regular savings account is that you don't have to pay taxes on any interest earned. This makes an IRA great for people who want to save money but don't want to pay tax on the interest they earn. This type of investment has its downsides.
To give an example, if your IRA is withdrawn too often, you can lose all your accumulated funds. The IRS may prohibit you from withdrawing funds from your IRA before you are 59 1/2 years of age. A penalty fee will be charged if you decide to withdraw funds.
A disadvantage to managing your IRA is the fact that fees must be paid. Many banks charge between 0.5%-2.0% per year. Others charge management fees that range from $10 to $50 per month.
If you prefer to keep your money outside a bank, you'll need to purchase insurance. Many insurers require that you own at least one ounce of gold before you can make a claim. You may be required by some insurers to purchase insurance that covers losses as high as $500,000.
If you choose to have a gold IRA you will need to establish how much gold to use. You may be limited in the amount of gold you can have by some providers. Others allow you to pick your weight.
It's also important to decide whether or not to buy gold futures contracts. Gold futures contracts are more expensive than physical gold. Futures contracts, however, allow for greater flexibility in buying gold. They enable you to establish a contract with an expiration date.
Also, you will need to decide on the type of insurance coverage you would like. The standard policy does not include theft protection or loss caused by fire, flood, earthquake. It does provide coverage for damage from natural disasters, however. You may consider adding additional coverage if you live in an area at high risk.
Additional to your insurance, you will need to consider how much it costs to store your gold. Storage costs are not covered by insurance. For safekeeping, banks typically charge $25-40 per month.
To open a IRA in gold, you will need to first speak with a qualified custodian. Custodians keep track of your investments and ensure compliance with federal regulations. Custodians can't sell assets. Instead, they must hold them as long as you request.
Once you have chosen the right type of IRA to suit your needs, it is time to fill out paperwork defining your goals. You should also include information about your desired investments, such as stocks or bonds, mutual funds, real estate, and mutual funds. Also, you should specify how much each month you plan to invest.
Once you have completed the forms, you will need to mail them to your provider with a check and a small deposit. The company will review your application and send you a confirmation letter.
Consider consulting a financial advisor when opening a golden IRA. A financial planner can help you decide the type of IRA that is right for your needs. They can help reduce your expenses by helping you find cheaper alternatives to buying insurance.
Can I purchase gold with my self directed IRA?
While you can purchase gold from your self-directed IRA (or any other brokerage firm), you must first open a brokerage account such as TD Ameritrade. If you have an existing retirement account, you can transfer funds to another one.
The IRS allows individuals up to $5.500 annually ($6,500 if you are married and filing jointly). This can be contributed to a traditional IRA. Individuals can contribute up to $1,000 annually ($2,000 if married and filing jointly) directly to a Roth IRA.
If you do decide you want to invest your money in gold, you should look into purchasing physical bullion instead of futures contracts. Futures contracts, which are financial instruments based upon the price of gold, are financial instruments. You can speculate on future prices, but not own the metal. You can only hold physical bullion, which is real silver and gold bars.
How much money should I put into my Roth IRA?
Roth IRAs can be used to save taxes on your retirement funds. You can't withdraw money from these accounts before you reach the age of 59 1/2. However, if your goal is to withdraw funds before that time, there are certain rules you must observe. First, you can't touch your principal (the initial amount that was deposited). No matter how much money you contribute, you cannot take out more than was originally deposited to the account. If you are able to take out more that what you have initially contributed, you must pay taxes.
The second rule states that income taxes must be paid before you can withdraw earnings. So, when you withdraw, you'll pay taxes on those earnings. Let's assume that you contribute $5,000 each year to your Roth IRA. Let's say you earn $10,000 each year after contributing. On the earnings, you would be responsible for $3,500 federal income taxes. You would have $6,500 less. Because you can only withdraw what you have initially contributed, this is all you can take out.
So, if you were to take out $4,000 of your earnings, you'd still owe taxes on the remaining $1,500. Additionally, half of your earnings would be lost because they will be taxed at 50% (half the 40%). Even though you had $7,000 in your Roth IRA account, you only received $4,000.
There are two types: Roth IRAs that are traditional and Roth. Traditional IRAs allow you to deduct pretax contributions from your taxable income. When you retire, you can use your traditional IRA to withdraw your contribution balance plus interest. A traditional IRA can be withdrawn up to the maximum amount allowed.
Roth IRAs are not allowed to allow you deductions for contributions. But once you've retired, you can withdraw the entire contribution amount plus any accrued interest. Unlike a traditional IRA, there is no minimum withdrawal requirement. Your contribution can be withdrawn at any age, not just when you reach 70 1/2.
Should You Get Gold?
In the past, gold was considered a haven for investors during economic turmoil. Today, many people are looking to precious metals like gold and avoiding traditional investments like bonds and stocks.
The trend for gold prices has been upward in recent years but they still remain low relative to other commodities like silver and oil.
Some experts think that this could change in the near future. Experts believe that gold prices could skyrocket in the face of another global financial crisis.
They also pointed out that gold is gaining popularity due to its perceived value, and potential return.
Consider these things if you are thinking of investing in gold.
- The first thing to do is assess whether you actually need the money you're putting aside for retirement. You can save for retirement and not invest your savings in gold. Gold does offer an extra layer of protection for those who reach retirement age.
- Second, ensure you fully understand the risks involved in buying gold. Each offers varying levels of flexibility and security.
- Finally, remember that gold doesn't offer the same level of safety as a bank account. Your gold coins may be lost and you might never get them back.
You should do your research before buying gold. Protect your gold if you already have it.
What are the advantages of a gold IRA
The best way to save money for retirement is to place it in an Individual Retirement Account. It is tax-deferred until it's withdrawn. You are in complete control of how much you take out each fiscal year. And there are many different types of IRAs. Some are more suitable for students who wish to save money for college. Others are designed for investors looking for higher returns. Roth IRAs, for example, allow people to contribute after they turn 59 1/2. They also pay taxes on any earnings when they retire. The earnings earned after they withdraw the funds aren't subject to any tax. This type of account might be a good choice if your goal is to retire early.
The gold IRA allows you to invest in different asset classes, which is similar to other IRAs. Unlike a regular IRA you don't need to worry about taxes while you wait for your gains to be available. This makes gold IRA accounts excellent options for people who prefer to keep their money invested instead of spending it.
Another benefit of owning gold through an IRA is that you get to enjoy the convenience of automatic withdrawals. This means that you don't need to worry about making monthly deposits. Direct debits could be set up to ensure you don't miss a single payment.
Gold is one of today's most safest investments. Because it isn't tied to any particular country its value tends be steady. Even in times of economic turmoil, gold prices tend not to fluctuate. Therefore, gold is often considered a good investment to protect your savings against inflation.
Statistics
- The price of gold jumped 131 percent from late 2007 to September 2011, when it hit a high of $1,921 an ounce, according to the World Gold Council. (aarp.org)
- If you take distributions before hitting 59.5, you'll owe a 10% penalty on the amount withdrawn. (lendedu.com)
- You can only purchase gold bars at least 99.5% purity. (forbes.com)
- If you accidentally make an improper transaction, the IRS will disallow it and count it as a withdrawal, so you would owe income tax on the item's value and, if you are younger than 59 ½, an additional 10% early withdrawal penalty. (forbes.com)
- Instead, the economy improved, stocks rebounded, and gold plunged, losing 28 percent of its value in 2013. (aarp.org)
External Links
irs.gov
forbes.com
bbb.org
investopedia.com
How To
A growing trend: Gold IRAs
As investors look for ways to diversify their portfolios and protect themselves against inflation, the gold IRA trend is on the rise.
Owners of the gold IRA can use it to invest in physical bars and bullion gold. This IRA can be used to grow your wealth tax-free and is an alternative option to stocks and bonds.
Investors can manage their assets with a gold IRA without worrying about market volatility. Investors can use the gold IRA for protection against inflation and potential problems.
Investors also have the benefit of physical gold, which has unique properties such durability, portability and divisibility.
Additional benefits of the gold IRA include the ability to quickly pass ownership to heirs. Additionally, the IRS does not consider gold a money or a commodity.
Investors who seek financial stability and a safe haven are finding the gold IRA increasingly attractive.
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By: Kevin Helms
Title: Former SEC Official Warns Spot Bitcoin ETFs Will Create ‘Wall Street Fee-Sucking Scam of Epic Proportions'
Sourced From: news.bitcoin.com/former-sec-official-warns-spot-bitcoin-etfs-will-create-wall-street-fee-sucking-scam-of-epic-proportions/
Published Date: Thu, 28 Dec 2023 00:30:10 +0000
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