SEC Approves Spot Bitcoin ETFs Despite Not Endorsing Bitcoin: Chair Gary Gensler Clarifies Decision
Crypto News – Securities and Exchange Commission (SEC) Chair Gary Gensler emphasized on Wednesday that despite approving spot Exchange-Traded Funds (ETFs) holding Bitcoin, the agency was not endorsing the cryptocurrency itself. Gensler attributed the approval to evolving circumstances that led the SEC to grant the greenlight.
The decision followed a ruling by three judges in a D.C. court during the summer, which mandated the SEC to reevaluate Grayscale Investments’ application for a spot Bitcoin ETF. Gensler stated that it was time to progress in light of these developments.
In a statement, Gensler explained, “Based on these circumstances and the comprehensive discussions outlined in the approval order, I believe the most sustainable course of action is to authorize the listing and trading of these spot Bitcoin Exchange-Traded Product (ETP) shares.”
However, Gensler clarified that this decision did not signify a change in his stance on cryptocurrencies. He emphasized that the approval should not be construed as an indication of the Commission’s willingness to endorse listing standards for crypto asset securities. Furthermore, he made it clear that the decision did not reflect the SEC’s views on the status of other crypto assets under federal securities laws or the compliance status of certain crypto asset market participants.
Gensler reiterated, “As I’ve previously stated, without prejudging any particular crypto asset, the majority of crypto assets are considered investment contracts and are thus subject to federal securities laws.”
Regarding investor caution, Gensler emphasized that the approval did not equate to an endorsement of Bitcoin itself. He cautioned investors to remain vigilant about the various risks associated with Bitcoin and related products tied to the cryptocurrency.
Gensler also highlighted that spot Bitcoin ETFs would come with certain safeguards, including requirements for sponsors to provide comprehensive and equitable disclosures. Additionally, these ETFs would be traded on regulated exchanges with rules designed to prevent fraud and market manipulation.
SEC Commissioners Weigh In
SEC Commissioner Hester Peirce, a Republican, acknowledged the prolonged nature of this regulatory process and criticized the SEC’s handling of spot Bitcoin ETFs. She argued that the agency’s disproportionate focus on these filings had not only impacted the crypto market but also tarnished the SEC’s reputation. Peirce suggested that millions of dollars in staff time had been spent blocking these applications over the past decade.
Another Republican SEC Commissioner, Mark Uyeda, expressed concerns about specific aspects of the SEC’s approval order, particularly what he viewed as the introduction of a new standard. Uyeda cautioned that the rationale and legal analysis in the approval order could set a precedent for future matters before the Commission. He noted that despite approving the listing applications in this case, the underlying analytical approach effectively resembled a form of merit regulation.
While both Peirce and Uyeda supported the approvals, Democratic Commissioner Caroline Crenshaw dissented, expressing concerns about the spot market underlying spot Bitcoin ETFs. She argued that this market was rife with fraud and manipulation, lacking sufficient oversight. Crenshaw voiced deep apprehension about the impact of these products on U.S. households’ retirement accounts, warning against potential losses due to prevalent fraud and manipulation in the spot Bitcoin markets, which could affect the ETFs.
In the final vote, Chairman Gensler, along with Commissioners Peirce and Uyeda, voted in favor of approving the spot Bitcoin ETFs through an “order granting accelerated approval.” On the other hand, Democratic Commissioner Jaime Lizárraga and Commissioner Crenshaw voted against the approval.
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