Wednesday 10 January 2024 was a major landmark in the history of crypto, as the securities and exchange commission (SEC) approved 11 spot Bitcoin ETFs after years of futile applications.
However, the commission’s chairman Gary Gensler still remains skeptical about Bitcoin, the asset behind the ETFs. Gensler said Wednesday that the SEC didn’t endorse Bitcoin with the ETFs, but the agency was compelled to give the approval due to changing times.
Gensler decided to allow the approval of spot Bitcoin ETFs after a court sitting in D.C asked the commission to revisit its decision to deny Grayscale’s application to become a spot ETF.
“Based on these circumstances and those discussed more fully in the approval order, I feel the most sustainable path forward is to approve the listing and trading of these spot bitcoin ETP shares,” Gensler said in a statement.
Gensler further stated that The decision to approve spot bitcoin ETFs “should in no way signal the Commission’s willingness to approve listing standards for crypto asset securities.”
“Nor does the approval signal anything about the Commission’s views as to the status of other crypto assets under the federal securities laws or about the current state of non-compliance of certain crypto asset market participants with the federal securities laws,” Gensler added. “As I’ve said in the past, and without prejudging any one crypto asset, the vast majority of crypto assets are investment contracts and thus subject to the federal securities laws.”
Investors Cautioned
One of the things spot Bitcoin ETFs were expected to achieve was to win the confidence of investors. However,Gensler went further to caution investors, saying they should remain cautious despite the approval of ETFs.
“While we approved the listing and trading of certain spot bitcoin ETP shares today, we did not approve or endorse bitcoin,” he said. “Investors should remain cautious about the myriad risks associated with bitcoin and products whose value is tied to crypto.”
He however admitted that spot ETFs do confer some protection to investors since they will require sponsors to provide full and fair disclosures, and will be on regulated exchanges. The SEC had a few days ago released a blog warning against FOMO as the ETF approval date drew near.
SEC Commissioners React
Although the SEC works as a unit, there have been divisions among its commissioners for years over the question of spot Bitcoin ETFs. responding to the approval, one of the pro crypto Republican commissioners Hester Peirce said:
“This saga likely would have spanned well beyond a decade were it not for the DC Circuit-ex-machina.”
He also criticized the handling of ETFs applications in the past, saying it will damage the agency’s reputation beyond crypto.
Another Republican commissioner Mark Uyeda who also supports the ETFs expressed concern on the procedure for the approval.
“The Commission’s rationale and legal analysis in the Approval Order may serve as precedent for future matters that come before the Commission,” Uyeda said. “Even though the Commission is approving the listing applications in this instance, the underlying analytical approach effectively amounts to merit regulation.”
On the other hand, Democratic Commissioner Caroline Crenshaw expressed disappointment with the ETF approvals. She added that the crypto industry is full of fraud and the ETFs will serve as bait to attract innocent people to it.
