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Do Gary Gensler’s Latest Comments Mean Spot Bitcoin ETFs are Close at Hand?

Last Updated January 9, 2024 11:01 AM
Teuta Franjkovic
Last Updated January 9, 2024 11:01 AM

Key Takeaways

  • SEC Chair Gary Gensler cautions that cryptocurrency investments might not adhere to safeguards provided by securities laws.
  • The cryptocurrency domain is still subject to volatility and instances of insolvency.
  • New entrants in the crypto market are frequently targeted by fraudulent schemes, such as counterfeit coin deals.

SEC Chair Gary Gensler has shared advice  for cryptocurrency investors, providing “some things to keep in mind” in the context of the heightened anticipation surrounding the SEC’s decision on the first spot Bitcoin ETF.

The market is watching closely, as the SEC has received a dozen applications for this new financial product.

Gensler Issues Cautionary Remarks Ahead of Bitcoin ETF Decisions

SEC Chairman Gary Gensler’s recent comments  on cryptocurrency take place at a time when asset managers are filing for Bitcoin ETF approval. This indicates an increased level of regulatory scrutiny. In his tweets , Gensler cautioned potential investors in crypto assets. He emphasised the importance of being aware of the risks and the regulatory framework surrounding these investments.

He said :

“Those offering crypto asset investments/services may not be complying w/ applicable law, including federal securities laws.”

Gensler highlighted concerns that investors in crypto assets could face a lack of critical information and fundamental protections.

He did not specifically reference any of the proposed ETFs in his thread. However, the timing of his comments, coming just hours after major asset managers like BlackRock, Ark Invest/21Shares, VanEck, WisdomTree, Invesco, Fidelity, and Valkyrie submitted amended S-1 forms for their proposed funds, caught the attention of the cryptocurrency community.

This flurry of filings was interpreted as a strategic maneuver ahead of potential approval. This made Gensler’s remarks particularly noteworthy.

SEC Expected to Rule on Spot Bitcoin ETFs Soon

Following the submission of amended 19b-4 forms by exchanges like Nasdaq, the NYSE, and Cboe on Friday, the decision now rests with the SEC. If these forms receive approval, trading can commence as soon as the S-1 forms become “effective,” a process that occurs at the same time.

Expectations are high for a decision from the SEC in the coming days, especially with the January 10 deadline looming for a response to the application by Cathie Wood’s ARK Investment and 21Shares. However, analysts have pointed out the SEC has considerable discretion in this matter and could, potentially, delay its decision further.

Gensler’s comments on Monday did not provide clear indications of his stance. His remarks were consistent with previous cautions he has issued to cryptocurrency investors.

In late November, Gensler was reserved regarding the ongoing review process for spot Bitcoin funds, saying he did not want to “pre-judge” the issue. He has previously described the SEC’s review procedure as  “time-tested”.

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