U.S. Securities and Exchange Commission (SEC) Chair Gary Gensler has announced the regulatory approval of spot bitcoin exchange-traded product (ETP) shares. This decision marks a departure from the Commission’s previous disapprovals and reflects changes in circumstances, as outlined by Gensler in his official statement.
Quick News: SEC Chair Gensler Approves Spot Bitcoin ETPs Clarifies No Endorsement for Bitcoin
SEC Chair Gary Gensler Approves Trading of Spot Bitcoin ETP Shares, Emphasising Approval for Specific Products Without Conveying an Endorsement for Bitcoin Itself#Bitcoin #BitcoinETF pic.twitter.com/vyT1VIbyew
— Clout Scoop (@cloutscoop) January 10, 2024
Gensler’s Shifting Perspective
Chair Gensler acknowledged the Commission’s history of disapproving over 20 exchange rule filings for spot bitcoin ETPs under the leadership of former Chair Jay Clayton until March 2023. Notably, one of these filings, submitted by Grayscale, proposed the conversion of the Grayscale Bitcoin Trust into an ETP.
The shift in perspective comes after the U.S. Court of Appeals for the District of Columbia found shortcomings in the Commission’s reasoning behind disapproving Grayscale’s proposed ETP. The court vacated the Grayscale Order and remanded the matter to the Commission. Considering these circumstances, Gensler expressed that approving the listing and trading of spot bitcoin ETP shares is the most sustainable path forward.
Key Considerations and Protections for Investors
Gensler emphasized that the Commission evaluates rule filings based on consistency with the Exchange Act, regulations, and the protection of investors and the public interest. The approval is specific to ETPs holding one non-security commodity, bitcoin, and does not signal the Commission’s willingness to approve listing standards for crypto asset securities.
Investors are assured of certain protections, with sponsors of bitcoin ETPs mandated to provide full and truthful disclosures about the products. These ETPs will be listed and traded on registered national securities exchanges, subject to rules designed to prevent fraud and manipulation. Gensler highlighted the ongoing review of registration statements for 10 spot bitcoin ETPs simultaneously to promote fairness and competition.
Cautionary Notes on Bitcoin
While approving spot bitcoin ETPs, Gensler cautioned investors about the risks associated with bitcoin. He noted that bitcoin is primarily a speculative and volatile asset, often used for illicit activities such as ransomware, money laundering, sanction evasion, and terrorist financing.
The approval of spot bitcoin ETPs under Gensler’s leadership reflects a nuanced approach, prioritising investor protection and regulatory oversight while acknowledging the unique challenges posed by cryptocurrencies like bitcoin. Investors are advised to exercise caution and conduct thorough research before engaging in bitcoin-related investments.
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Disclaimer: The following article is based on the official statement released by SEC Chair Gary Gensler regarding the approval of spot bitcoin exchange-traded product (ETP) shares. The views expressed in the article are solely those of the SEC Chair and do not constitute financial advice.
