The U.S. Securities and Exchange Commission (SEC) chair, Gary Gensler, recently spoke dismissively of spot Bitcoin ETFs in a conversation with Bloomberg. While Gensler introduced new rules to reduce risk in the U.S. Treasury market, he downplayed the significance of crypto ETFs in comparison.
Gensler emphasized the importance of the $26-trillion-dollar Treasury market, which serves as the foundation of the entire capital market. He highlighted how it funds the government, influences monetary policy, and maintains the dominance of the dollar worldwide. When asked about crypto, Gensler expressed his skepticism, stating that crypto securities are smaller in scale and do not have the same impact. He also acknowledged that many investors have been harmed in the crypto market due to non-compliance issues.
Despite his dismissive attitude towards crypto ETFs, Gensler admitted that there are several spot Bitcoin ETF applications pending with the SEC. He revealed that around eight to twelve applications are currently in progress, with various divisions of the SEC reviewing them. Notably, Gensler mentioned a court outcome that implies the SEC must consider Grayscale’s ETF conversion application. However, he did not directly address whether the SEC’s engagement with these applications signifies progress.
The SEC recently held meetings with numerous spot Bitcoin ETF applicants in late November and December. Several applicants, including BlackRock, have submitted multiple amendments to their proposals. These discussions primarily revolve around contrasting cash redemption methods versus in-kind creation methods, as this distinction determines whether ETF participants can transact in crypto. Despite Gensler’s silence on the approval of a spot Bitcoin ETF, some industry experts remain hopeful.
Bloomberg ETF analysts, Eric Balchunas and James Seyffart, have suggested that there is a 90% chance of a spot Bitcoin ETF being approved by January 10, 2024. Their optimism is rooted in the growing interest in crypto assets, as well as the potential for increased regulatory clarity and investor protection. While Gensler’s remarks may reflect his personal doubts about the crypto market, the industry continues to evolve, and the demand for regulated investment products tied to Bitcoin remains strong.
SEC Chair Gary Gensler dismissed the significance of spot Bitcoin ETFs compared to the Treasury market. While he introduced new rules to reduce risk in the Treasury market, his comments downplayed the impact of crypto securities. However, there are several pending spot Bitcoin ETF applications, and the SEC’s engagement with applicants suggests that progress may be underway. With industry experts expressing optimism about the potential approval of a spot Bitcoin ETF, the future of regulated crypto investment products remains uncertain but promising.
