The SEC’s decision to greenlight 11 spot Bitcoin ETFs was legal and mainly driven by the court’s judgment, according to Gensler.
In an interview with CNBC, he pointed out that the situation had changed since the SEC had rejected over 20 proposals for spot bitcoin ETPs in the past.
Gensler referred to the U.S. Court of Appeals for the District of Columbia’s decision that the SEC did not provide a sufficient rationale for denying the approval of Grayscale’s planned ETP. The court added that the initial disapproval unjustifiably denied Grayscale the opportunity to transform its Bitcoin Trust into an ETP.
Following this reason given by the court, Grayscale’s case was sent back to the SEC for necessary action. At this point, Gensler thought that the best way forward was to approve the listing and trading of the spot Bitcoin ETF, based on the court’s ruling and other factors.
Gensler noted that the SEC examines any proposal by a national securities exchange to see if it complies with the Exchange Act and its rules.
Gensler advised investors to be wary of the numerous risks involved with Bitcoin and crypto-related products, as they are vulnerable to volatility, fraud, cyberattacks, market manipulation, and environmental issues. However, the SEC chairman emphasized that crypto assets are investment contracts and therefore fall under federal securities laws.
The spot Bitcoin ETF approval came with some drawbacks, such as more regulatory oversight, compliance costs, and competition, among others. Because of the dangers of digital currency, especially the widespread scams and shady investment schemes, the SEC will probably keep reviewing each proposal individually and applying the current legal framework and standards to the crypto industry.
