SEC’s approval of Bitcoin ETFs sends muddled message

After the announcement was made, SEC chair Gary Gensler was said that the step should not be seen as an endorsement of cryptocurrencies from the US market regulator.

Updated - January 16, 2024 01:44 pm IST

Published - January 16, 2024 12:57 pm IST

FILE PHOTO: SEC chair Gary Gensler said that the step should not be seen as an endorsement of cryptocurrencies from the US market regulator.

FILE PHOTO: SEC chair Gary Gensler said that the step should not be seen as an endorsement of cryptocurrencies from the US market regulator. | Photo Credit: Reuters

Despite final approval from the US Securities and Exchange Commission (SEC) for Bitcoin exchange-traded funds or ETFs by investment firms like Fidelity, BlackRock and Grayscale, the cryptocurrency hasn’t been warmly received at the regulatory body. Immediately after the announcement was made, SEC chair Gary Gensler was quoted saying that the step should not be seen as an endorsement of cryptocurrencies from the US market regulator.

Statements made by three out of five SEC commissioners on January 10, a day ahead of the news showed discord in the SEC over the underlying asset and the bias against it. Available on the SEC website, commissioner Caroline Crenshaw called the approval “unsound and ahistorical” warning that the SEC’s actions could further “sacrifice investor protection.”

However, commissioners Mark Uyeda and Hester Peirce published statements calling out the difference in treatment between applications for other exchange traded products and bitcoin. Uyeda’s statement noted that, “...the Commission has never provided an explanation for this standard and appears to have acted in an arbitrary and capricious manner in using it to disapprove prior spot bitcoin ETP (exchange-traded product applications.”

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The arguments were submitted a day after SEC claimed that their official account on microblogging platform X had been “compromised.” A notice posted from their social media account stated that the SEC had approved listings for Bitcoin ETFs which was revoked by Gensler moments later. A spokesperson later said that an “unknown party” had accessed the account.

A Reuters report today stated that the ETFs saw $4.6 billion in share trading volume on its first day on the exchange.

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