May 20, 2024

Gensler: SEC has not approved bitcoin ETFs, Twitter ‘compromised’

Several of the companies proposing to offer the products — which the SEC is expected to approve as soon as Wednesday — were caught off guard by the initial post. Trade organizations began to send a flurry of what turned out to be premature statements in reaction. And the price of bitcoin briefly jumped higher.

“What the hell?” a representative of one of the pending-ETF issuers said on a call with POLITICO, before the SEC publicly addressed the original post.

Sen. Bill Hagerty, a Tennessee Republican who sits on the Senate Banking Committee, called the SEC’s original post “unacceptable.”

“Just like the SEC would demand accountability from a public company if they made such a colossal market-moving mistake, Congress needs answers on what just happened,” Hagerty said on X.

About a dozen financial and crypto giants, including BlackRock, Fidelity and Grayscale, are awaiting final word from the agency on their applications to launch the products, a landmark moment that backers say will open the door for ordinary investors to tap into the world’s largest and oldest crypto token like never before.

Yet if approved, the bitcoin ETFs stand to become a new flashpoint in Washington’s regulation of the $1.7 trillion crypto market.

Many of Gensler’s allies, including progressive lawmakers and investor advocates, have pressed the agency in recent days on the dangers of signing off on the products. Their concerns revolve around wrapping what they say is an inherently risky asset — bitcoin — in an ETF, giving investors a false sense of security.

ETFs are investment vehicles that trade on regulated stock exchanges and are designed to track the price of an underlying asset. The SEC has repeatedly rejected bitcoin ETF applications over the last decade, often on the grounds that the underlying crypto market is at risk of becoming subject to manipulation. Last year, however, a federal court shot down the agency’s rejection of a bitcoin ETF bid from Grayscale, a leading crypto asset manager — giving the industry new hope.

If the SEC goes ahead with the bitcoin ETF approval on Wednesday, trading will likely kick off the next day. An executive at one of the issuers, who was granted anonymity because they were not authorized to speak publicly, said the SEC has told them it has no further comment on their application, indicating that approval is imminent.

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