The US Securities and Exchange Commission (SEC) recently approved a spot Bitcoin exchange-traded fund (ETF), which sparked rumours over SEC Chair Gary Gensler’s intentions.
Many had assumed that Gary Gensler, who has frequently drawn attention to the dangers of investing in cryptocurrencies, would perhaps obstruct such a development.
Nevertheless, Gary Gensler voted in favour of approval along with two other commissioners during the SEC’s vote on the spot Bitcoin ETF, while two commissioners opposed it.
With some speculating that Gensler might have been the deciding vote, this 3-2 result called into doubt his position. In a follow-up statement, Gary Gensler reiterated his disapproving stance towards cryptocurrencies, calling Bitcoin a “speculative, volatile asset” and stressing that the SEC’s clearance did not imply a support of the cryptocurrency.
The SEC chair might have cast the deciding vote, based on the 3-2 vote total. After the public was informed of the historic approval on January 10, Gensler reiterated his narrative in which he was mostly sceptical of cryptocurrencies, referring to Bitcoin as a "speculative, volatile asset" and claiming that the commission had not "approved or endorse" the cryptocurrency even though the ETF had received clearance.
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When attempts were made to reach out to Gensler’s office, no response had been received as of the time of writing.
Some online commentators asserted that the SEC chair may have aligned with Wall Street interests, speculating that the expansion of cryptocurrency products could potentially draw significant capital from investors.
Others surmised that since the SEC had been ordered by a federal judge to examine Grayscale’s offering, “the writing was already on the wall” for the agency to approve a spot Bitcoin ETF.
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Many theories surfaced about Gensler’s vote, some speculating that he might have supported Wall Street interests by voting in anticipation of higher investor funding as cryptocurrency products expanded.
Others cited a court-mandated examination of Grayscale’s application for a spot Bitcoin ETF, suggesting that the SEC may have been forced to approve such ETFs after the court ruled in Grayscale’s favour.
The SEC’s prior rejection of Grayscale’s ETF application was deemed by the court to be “arbitrary and capricious,” implying that alternative grounds unrelated to market manipulation and investor protection would be needed if the SEC were to reject a spot Bitcoin ETF in the future.
The CEO of the Blockchain Association, Kristin Smith, emphasised the ETF’s delayed but welcome approval, pointing out that there has been a clear consumer desire for this easily available product for years.
The court declared that the SEC had been “arbitrary and capricious” in rejecting the asset manager’s ETF application, and Grayscale was successful in its appeal in August.
According to this ruling, the SEC would have had to make a different choice to reject a spot Bitcoin ETF after the court order, such as denying the possibility of market manipulation risks and protecting investors.
CEO of the Blockchain Association, Kristin Smith, expressed to reporters, “It would have been simpler, quicker, and much less painful had Chair Gensler approved an ETF years ago, rather than being essentially compelled to do so by court order.” Smith emphasized the clear consumer demand for this accessible product, aligning with the SEC chair’s acknowledgment that customers could benefit from a prudent and vigilant regulator. Despite the extended timeline, the SEC’s approval of the ETF is seen as a positive change in the industry.
In closing, Representatives Patrick McHenry and French Hill of the House Financial Services Committee applauded the SEC’s decision to support an Exchange-Traded Fund (ETF) for cryptocurrencies, highlighting a significant shift from the regulatory paradigm that mostly depended on enforcement actions.
The change is seen as a move in the right direction towards bringing clarity and regulatory certainty to the bitcoin industry.
But the ETF’s clearance begs the question of what this means for the SEC’s continuing litigation actions against well-known cryptocurrency companies including Ripple, Coinbase, Kraken, and Binance.
The commission’s claim that a sizable portion of bitcoins might be regarded as unregistered securities complicates the already convoluted regulatory environment.
The way these legal cases are resolved will probably influence the future cryptocurrency regulatory landscape.
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