Alex Dovbnya
Gensler’s comments on CNBC, combined with Geraci’s analysis, suggest that approving a spot bitcoin ETF is still a distant dream
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On Feb. 10, SEC Chairman Gary Gensler appeared on CNBC to discuss a recent enforcement action against cryptocurrency trading platform Kraken.
In the interview, Gensler emphasized the importance of full, fair and truthful disclosure of investment contracts and investment plans offered to the American public.
In a related development, ETF Store President Nate Geraci tweeted that the SEC is unlikely to approve a Bitcoin exchange-traded spot fund (ETF) any time soon.
In his tweet, Geraci noted that Gensler stated that the SEC would not approve such a product until cryptocurrency exchanges are regulated.
In the interview, Gensler emphasized the “fundamental business” in the United States, which requires companies that offer investment contracts and investment programs to provide full, fair and truthful disclosure to the investing public. He explained that “the labels don’t matter” and that the underlying economics matter.
He also made it clear that it doesn’t matter whether an investment is labeled as lending, earnings, yield or APY, as long as it complies with the basic full disclosure agreement.
Gensler’s comments have significant implications for the future of spot bitcoin ETFs. According to Geraci, even if the SEC loses the Grayscale lawsuit, the SEC is more likely to force the delisting or closure of futures-based products than it is to approve a spot Bitcoin ETF.
The formidable regulator gave the green light to a futures-based ETF back in October 2021, sparking a major rally.
This development comes as a disappointment to investors and industry participants who have been eagerly awaiting the approval of a spot Bitcoin ETF.
The lack of regulation of cryptocurrency exchanges has been a major obstacle to the approval of such a product, and Gensler’s comments suggest that this obstacle is unlikely to be removed anytime soon.
The SEC’s emphasis on regulation and full disclosure coupled with the lack of regulation of cryptocurrency exchanges will likely delay the approval of such a product for the foreseeable future.
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