Spot Bitcoin ETFs Are on a Rough Trail. Life and Annuities Were There

The U.S. Securities and Exchange Commission startled cryptocurrency skeptics earlier in January when it grudgingly agreed to approve 11 spot bitcoin exchange-traded fund applications.

Skeptics, including SEC Chair Gary Gensler, who said he felt forced to vote for approval because of the effects of federal court rulings, suggested that spot bitcoin ETFs may suffer from manipulation and volatility.

Whether the skeptics prove to be right, one important point is that many types of financial services products take time to gel. Modern life insurance policies are no exception.

Traditional monetary systems have been rising and falling since the Romans learned to add copper to make the gold in their gold coins go farther.

Early investment markets were prone to overheated, poorly regulated speculation. A frenzy involving stock and notes tied to real estate in the Mississippi River valley crashed the market in France in 1720, before Europeans barely had time to explore much of the valley.

The life insurance and annuity markets have gone through similar boom-and-bust cycles.

In one early wave, medieval monasteries tried to sell “corrodies,” or arrangements that combined cash annuity benefits with old-age housing benefits, and ran into problems with customers who had paid too little filling their beds and guzzling their wine.

In 1777, because of problems with bubbles and fraud involving a second wave of annuity issuers, England’s parliament began to require that all lifetime income annuities be registered with the Court of Chancery.