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Why Gary Gensler Choose Not To Block a Spot Bitcoin ETF?

2024-01-12 15:20:10

Many observers speculated that the SEC chair had little room to reject the investment vehicle following a court-mandated review of Grayscale's spot Bitcoin ETF application.


On January 10, after a failed attempt the day before, the United States Securities and Exchange Commission (SEC), led by Chair Gary Gensler, granted approval for a spot Bitcoin exchange-traded fund. This marked the first time the SEC approved a spot cryptocurrency investment vehicle, prompting inquiries into Gensler's motives. Despite frequently expressing concerns about crypto investments and linking digital assets to fraud, Gensler, along with Commissioners Hester Peirce and Mark Uyeda, voted in favor of the spot Bitcoin ETF when the SEC conducted the vote. On the opposing side, Commissioners Caroline Crenshaw and Jaime Lizárraga dissented.

With a 3-2 vote, indications suggested that Gensler might have held the pivotal vote. In a statement on January 10, following the public revelation of the historic approval, Gensler maintained his critical stance on crypto, branding BTC as a speculative, volatile asset and emphasizing that the commission did not approve or endorse Bitcoin despite greenlighting the ETF. Online speculations varied, with some suggesting that the SEC chair aligned with Wall Street to attract investor funds through the expansion of crypto products. Others theorized that the SEC's approval of a spot Bitcoin ETF was inevitable, given the court mandate requiring a review of Grayscale's offering.

Detractors Criticize The Approval of The Spot Bitcoin ETF, Deeming It Unsound and Ahistorical

Grayscale secured a victory in August when the court ruled that the SEC had acted arbitrarily and capriciously in rejecting the asset manager's ETF application. This verdict implied that if the SEC were to decline a spot Bitcoin ETF post the court's decision, it would need to cite different grounds, deviating from concerns related to market manipulation and investor protection.

House Financial Services Committee members, Representatives Patrick McHenry and French Hill, applauded the SEC's decision, viewing it as a significant improvement compared to the commission's past regulatory approach to crypto, which relied heavily on enforcement. The potential impact of the ETF approval on the SEC's ongoing lawsuits against crypto firms remains uncertain. In these legal battles, the SEC alleges that numerous cryptocurrencies qualify as unregistered securities.

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