Saturday, 16 December 2023

Bitcoin ETF Outlook Brightens As SEC Chair Promises Regulatory Updates Post Court Decisions

by Rose White

In a recent interview with CNBC, Gary Gensler, the Chair of the US Securities and Exchange Commission (SEC), provided insights into the status of spot Bitcoin ETF applications and highlighted concerns regarding alleged noncompliance and fraud within the crypto industry.

Previous Denials Of Bitcoin ETF Reevaluated?

During the Interview, Gensler acknowledged that the SEC has received between eight and twelve filings for spot Bitcoin ETFs, with an upcoming approval window anticipated in early January. 

Gensler emphasized that as the Chair of the commission, he refrains from prejudging any Bitcoin ETF application, and the process is currently underway. 

Gensler also mentioned that previous denials of such applications have been reevaluated due to court rulings in the District of Columbia, prompting the SEC to take a fresh look at the matter. Gensler further stated on the matter: 

I’m not to prejudge anything. So, that’s going through the process right now. And as you might know, we had in the past denied a number of these applications, but the courts here in the District of Columbia weighed in on that. And so we’re taking a new look at this based upon those court rulings. 

Concerns Over Fraud In The Crypto Industry

Discussing the crypto industry at large, Gensler expressed concerns about alleged noncompliance with securities laws and other regulations, including anti-money laundering (AML) measures. 

Despite a “new look” at the applications of Bitcoin ETFs, the SEC chair highlighted the prevalence of “fraud and bad actors” within the field, noting that the
“lack of fundamental information” on many projects poses significant risks for investors. 

Furthermore, Gensler criticized the “commingling” and “questionable practices” of intermediaries on crypto exchanges, stressing that such conduct would not be tolerated in traditional financial systems. The SEC chair further claimed:

There’s a lot of noncompliance, not only with the securities laws but other laws around any money laundering and protecting the public against bad actors there. And so I would note, this is a field where you still don’t have the fundamental information on many of these projects. And the intermediaries of the so-called crypto exchanges are commingling and doing things that we do not allow anywhere else in our financial system. 

“Crypto Market Still Resembles The Wild West”

Addressing the perception that fraud has been eliminated from the crypto industry, Gensler provided a contrasting viewpoint. Gensler emphasized that repeated bankruptcies and fraud cases, along with the SEC’s enforcement efforts of approximately 150 to 175 successful settlements or litigations, demonstrate that the crypto market remains akin to the “Wild West” globally. 

Gensler underscored the need for increased investor confidence and protection, as numerous individuals have suffered financial losses and have only been left to navigate bankruptcy proceedings.

Overall, despite the recognition of the importance of Bitcoin ETF applications, there is no indication of an imminent shift in enforcement approach or discussion of regulatory frameworks that could foster innovation and instill confidence among US customers of exchanges and crypto firms. 

However, as institutions continue to make changes and updates to their Bitcoin ETF applications, there is optimism for a positive outcome in early January 2024. Nonetheless, the realization of this optimism remains uncertain.

Bitcoin ETF Outlook Brightens As SEC Chair Promises Regulatory Updates Post Court Decisions

At the time of writing, Bitcoin is currently trading at $42,300. Over the past 24 hours, the cryptocurrency has been experiencing sideways price movement. However, it has managed to hold its crucial support level of $42,000. 

Feature image from Shutterstock, chart from