SEC Approves Spot Bitcoin ETF, But Doesn’t Endorse Bitcoin: Gary Gensler

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The SEC emphasizes that while it approves spot Bitcoin ETFs, it does not endorse Bitcoin itself. This action follows a legal battle and the SEC is focused on protecting investors and complying with securities laws. Chairman Gensler also emphasized the distinction between ETPs and the speculative nature of the underlying digital assets.

SEC Approves Spot Bitcoin ETP Shares While Maintaining Neutral Stance on Bitcoin

Today the U.S. Securities and Exchange Commission (SEC) Approved Listing and trading of spot Bitcoin ETFs. However, it is important to note that this decision, announced by SEC Chairman Gary Gensler, does not constitute an endorsement of Bitcoin as a cryptocurrency.

Chairman Gensler made it clear in his statement: “We today approved the listing and trading of certain spot Bitcoin ETP shares, but did not endorse or endorse Bitcoin.” The statement highlights the SEC’s stance on the differentiation between allowing investment products related to Bitcoin and approving the digital currency itself.

The SEC’s decision comes after a series of legal battles and regulatory hurdles surrounding the introduction of spot Bitcoin ETFs in the United States. Gensler emphasized the commission’s commitment to acting within the boundaries of the law and respecting interpretations provided by the courts.

From 2018 to March 2023, the SEC rejected more than 20 exchange rule filings related to spot Bitcoin ETPs, including one filed by Grayscale to convert its Bitcoin Trust to an ETP. The regulatory landscape changed significantly when the U.S. Court of Appeals for the District of Columbia ruled that the SEC failed to adequately justify its disapproval of Grayscale’s proposed ETP. As a result, the grayscale order was vacated and the matter was remanded to the committee.

In light of these legal developments, the SEC has decided to authorize the listing and trading of spot Bitcoin ETP shares. Gensler reiterated that the Commission evaluates rule submissions for consistency with the Exchange Act and related regulations, with an overriding focus on investor protection and the public interest. The SEC maintains a neutral position with respect to the assets within a particular company, investment or ETP as long as they comply with securities laws and regulations.

It is essential to emphasize that The SEC’s decision is limited to ETFs that hold Bitcoin and does not signal the Commission’s commitment to supporting listing standards for cryptocurrency asset securities. Gensler also reiterated his position that most crypto assets are considered investment contracts and therefore subject to federal securities laws.

Despite Bitcoin’s inherent volatility and speculative nature, Gensler pointed out that investors can already access Bitcoin through a variety of channels.These include brokerage firms, mutual funds, national stock exchanges, peer-to-peer payment apps, Grayscale Bitcoin Trust, and more. However, the SEC’s approval introduces specific protections for investors.

Bitcoin ETP sponsors must provide comprehensive and transparent disclosure of their products through public registration statements and periodic filings. These disclosures aim to inform investors of the product’s capabilities, but approval does not imply approval of a specific ETP contract, such as a custody solution.

Besides these ETPs are listed and traded on registered national stock exchanges under regulations designed to prevent fraud and manipulation. The SEC closely monitors these exchanges to ensure compliance and investigates instances of fraud or manipulation involving social media platforms. These regulated exchanges also have mechanisms to resolve conflicts of interest and protect the interests of investors.

Existing regulations and standards will continue to apply to the purchase and sale of approved ETPs, including regulatory best interests for broker-dealers recommending ETPs to individual investors and fiduciary duties under the Investment Advisers Act for investment advisers. However, it is important to reiterate that today’s approval does not extend to approving cryptocurrency trading platforms, which often operate outside the boundaries of federal securities laws and may pose conflicts of interest.

In addition to approving specific spot Bitcoin ETPs, the Commission is concurrently reviewing registration statements for 10 such ETPs. This move aims to promote fairness, competition and a level playing field for issuers, ultimately benefiting investors and the wider market.

Gensler concludes by highlighting the differences between precious metals ETPs, which are used for both industrial and consumer purposes, and Bitcoin, which is primarily a speculative asset with potential links to illicit activities such as ransomware, money laundering, sanctions evasion, and terrorist financing. I did it. His message to investors was clear. His advice is to exercise caution and be aware of the various risks associated with Bitcoin and cryptocurrency-related products.

Also Read: Price Impact of US Spot Bitcoin ETF Approval: Analysis of Short-Term Surge and Long-Term Investment Potential