Approving Bitcoin ETF Would Be a ‘Historic Mistake

Dennis Kelleher, the CEO of non-profit organization Better Markets, is urging the U.S. Securities and Exchange Commission (SEC) to refrain from approving a spot Bitcoin BTC ticker down $43,698 exchange-traded fund (ETF), arguing that such approval contradicts the core principles of the regulatory body.

Approving Bitcoin ETF Would Be a ‘Historic Mistake

In a letter dated Jan. 5 addressed to SEC Secretary Vanessa Countryman, Kelleher stressed that approving a spot Bitcoin ETF could expose investors to significant risks:

“We submit this supplemental comment letter (which Better Markets very rarely does) because it would be a grave if not historic mistake almost certainly leading to massive investor harm if the SEC approves the pending rule change.”

Kelleher argued that the proposed product could subject investors to the risk of potential fraud, a concern he contends is commonly associated with the crypto industry. He stated, “The approval of these spot Bitcoin ETPs would not only expose investors to a market thoroughly contaminated with fraud and manipulation.”

As recently reported, over 324,000 crypto users fell victim to phishing scams in 2023, resulting in approximately $295 million in digital assets lost to wallet drainers.

Additionally, Kelleher pointed out that approval could allow the crypto industry to claim that its products are now endorsed by the U.S. government. However, prominent crypto commentators, such as Bloomberg ETF analyst James Seyffart, criticized the letter on social media.

Seyffart reiterated the significant effort invested by asset management firms in advancing their ETF applications in a post on X (formerly Twitter). Meanwhile, Fox Business journalist Eleanor Terrett echoed negative remarks Kelleher made about crypto in recent times in another X post, recalling him stating, “It’s worse than a fantasy; it’s a fraud on the public” during an interview with the Institute for New Economic Thinking in May 2023.

In more recent developments, 11 spot Bitcoin ETF applicants submitted 19b-4 amendment forms before the close of business on Jan. 5. While these forms are one of the final stages in the SEC approval process, completion of S-1 documents is necessary for U.S. exchanges to begin listing shares of investment securities with direct exposure to crypto.

Some experts speculate that final approval for spot Bitcoin ETFs may occur before Jan. 10, the deadline for an offering from ARK Invest and 21Shares.