The SEC Chair’s Dismissive Views on Spot Bitcoin ETFs

The SEC Chair’s Dismissive Views on Spot Bitcoin ETFs

The U.S. Securities and Exchange Commission (SEC) chair, Gary Gensler, recently shared his views on spot Bitcoin ETFs in an interview with Bloomberg. However, before addressing the topic at hand, Gensler emphasized the significance of the $26-trillion-dollar Treasury market. He highlighted how this market serves as the foundation for the entire capital market, funding the government, shaping monetary policy, and maintaining the dominance of the dollar globally.

With the importance of the Treasury market in mind, Gensler downplayed the significance of crypto ETFs. He emphasized that crypto securities are much smaller compared to the Treasury market and do not play a role in funding the government or conducting monetary policy. Gensler also mentioned the harm that some investors have faced in the crypto market due to non-compliance issues.

Despite his dismissive stance, Gensler acknowledged the existence of several spot Bitcoin ETF applications currently pending with the SEC. He mentioned that between eight and twelve of these applications are in progress, and the SEC staff is working on responding to these submissions. Gensler also referred to a court outcome that requires the SEC to consider Grayscale’s ETF conversion application, although he did not delve into the details.

During the interview, Gensler did not directly address the question about whether the SEC’s current level of engagement signifies progress. The SEC has had meetings with various spot Bitcoin ETF applicants in November and December, including discussions with BlackRock, who has submitted numerous amendments. One of the key topics of these discussions pertains to the differences between cash and in-kind redemption and creation methods, which will have implications on whether ETF participants can transact in cryptocurrencies.

While Gensler and the SEC did not provide a direct answer about the approval of spot Bitcoin ETFs, some industry experts remain optimistic. 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.

SEC Chair Gary Gensler expressed dismissive views on spot Bitcoin ETFs, contrasting their significance to the $26-trillion-dollar Treasury market. Despite acknowledging the existence of pending applications, Gensler downplayed the importance of crypto ETFs and highlighted the harm caused by non-compliance. While the SEC’s level of engagement remains unclear, there is hope within the industry that a spot Bitcoin ETF will be approved in the near future.

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