The U.S. Securities and Exchange Commission (SEC) chair, Gary Gensler, recently made dismissive remarks regarding spot Bitcoin exchange-traded funds (ETFs) in a conversation with Bloomberg. Although the SEC has introduced new rules aimed at reducing risk in the U.S. Treasury market, Gensler downplayed the significance of crypto ETFs in comparison.
Gensler highlighted the importance of the $26-trillion-dollar Treasury market, which forms the basis of the entire capital market. This market is responsible for funding the government, implementing monetary policy through the Federal Reserve, and maintaining the global dominance of the dollar. Given the magnitude of the Treasury market, Gensler questioned the relevance of discussing cryptocurrency.
Gensler further diminished the importance of crypto securities, noting their smaller size compared to the Treasury market. He pointed out that crypto assets do not serve as the primary source of government funding or as a means of conducting monetary policy. Moreover, he acknowledged that many investors have been harmed in the crypto market, citing non-compliance as a major issue.
Despite downplaying the significance of crypto ETFs, Gensler mentioned the presence of several pending spot Bitcoin ETF applications. He revealed that between eight and a dozen applications are currently in progress, with various divisions of the SEC responding to these submissions. Gensler also alluded to a court outcome that requires the SEC to consider Grayscale’s ETF conversion application.
The SEC has been engaging with spot Bitcoin ETF applicants in recent months, conducting meetings with multiple participants. Noteworthy applicants, such as BlackRock, have submitted numerous amendments, indicating ongoing discussions regarding redemption and creation methods. These discussions will determine whether ETF participants can transact in cryptocurrency. While Gensler did not directly address whether a spot Bitcoin ETF would be approved soon, some industry insiders remain optimistic.
Bloomberg ETF analysts Eric Balchunas and James Seyffart have predicted a 90% chance of a spot Bitcoin ETF receiving approval by January 10, 2024. While this speculation provides hope for those advocating for a cryptocurrency-based ETF, the SEC has not made any official statements regarding the approval timeline.
Gensler’s dismissive stance on spot Bitcoin ETFs highlights the SEC’s prioritization of the Treasury market and its regulatory efforts to reduce risk in that domain. The importance of the Treasury market cannot be understated, as it plays a critical role in government funding and global monetary policy. While the SEC has acknowledged the existence of pending spot Bitcoin ETF applications, the extent of their engagement and the potential approval of these ETFs remain uncertain. Only time will tell if the SEC decides to embrace the burgeoning cryptocurrency market fully.
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