SEC Chairman Gary Gensler confirmed the spot Bitcoin ETF approval and shared his first words on the subject.
US Securities and Exchange Commission (SEC) Chairman Gary Gensler confirmed the spot Bitcoin ETF approvals in a statement made on the institution’s official website. President Gary Gensler’s first words about the spot Bitcoin ETF approval, which has been long awaited by cryptocurrency investors, were as follows:
Today, the commission approved the listing and trading of a number of spot Bitcoin exchange-traded funds (ETPs).
As I have often said, the commission operates within the law and the way the courts interpret the law. The commission rejected exchange rule filings for more than 20 spot Bitcoin ETPs starting in 2018 under Chairman Jay Clayton and running through March 2023. One of these files was an application by Grayscale to convert the Grayscale Bitcoin Trust into an ETP.
We are now faced with a new round of similar applications that we have rejected in the past. However, conditions have changed. The U.S. Court of Appeals for the District of Columbia ruled that the commission did not adequately explain its reasoning for denying listing and trading of Grayscale’s proposed ETP. (Grayscale Decision) Therefore, the court overturned the Grayscale decision and sent the matter back to the commission. In light of these circumstances and the conditions discussed in more detail in the confirmation order, I consider it the most sustainable path to approve the listing and trading of this spot bitcoin ETP.
The Commission evaluates any rules filing made by a national securities exchange based on whether it complies with the Exchange Act and regulations thereunder and whether it is intended to protect investors and the public interest. The Commission does not express an opinion on specific companies, investments or assets underlying an ETP and is impartial. As long as the issuer of a security and its listing exchange comply with the Securities Act, the Exchange Act and the commission’s rules, we must provide that issuer with the same access to our regulated markets as everyone else.
Importantly, today’s commission action is limited to ETPs that only hold Bitcoin, a commodity that is not a security. This should in no way signal the commission’s willingness to approve listing standards for cryptoasset securities. Likewise, the approval does not indicate the commission’s views on the status of other cryptoassets under the federal securities laws or on the current noncompliance of certain cryptoasset market participants with the federal securities laws. As I said before, and without prejudging any crypto asset, most crypto assets are investment contracts and are therefore subject to federal securities laws.
Investors today can already buy, sell, or otherwise gain exposure to Bitcoin at many brokerages, through mutual funds, national securities exchanges, peer-to-peer payment (P2P) applications, non-compliant crypto trading platforms, and of course through the Grayscale Bitcoin Trust. Today’s action will include certain protections for investors:
First, sponsors of Bitcoin ETPs will have to provide full, fair and accurate disclosure about the products. Investors in any listed and traded Bitcoin ETP will benefit from disclosures contained in public registration statements and required periodic filings. While these disclosures are necessary, today’s action does not confirm or support the ETP arrangements disclosed, such as custody arrangements.
Second, these products will be listed and traded on registered national securities exchanges. Such regulated exchanges are required to have rules to prevent fraud and manipulation, and we will monitor them closely to ensure they enforce these rules. The Commission will also fully investigate any fraud or manipulation in the securities markets, including fraud or manipulation using social media platforms. Such regulated exchanges also have rules to address certain conflicts of interest and protect investors and the public interest.
Additionally, existing rules and standards of conduct will apply to the trading of approved ETPs. For example, this includes the “Regulation Best Interest” regulation when broker-dealers recommend ETPs to retail investors, as well as the duty of liability for an investment advisor under the “Investment Advisers” law. Today’s action does not endorse or support crypto trading platforms or brokers, which often are not compliant with federal securities laws and frequently have conflicts of interest.
Third, commission staff is also about to complete a review of registration statements for 10 spot Bitcoin ETPs. This will create a level playing field for issuers and promote competition and fairness that will benefit investors and the broader market.
Since 2004, this agency has had experience overseeing spot commodity ETPs holding certain precious metals. This experience will be valuable in overseeing spot Bitcoin ETP trading.
I would like to point out that although we are neutral, the underlying assets in metal ETPs have consumer and industrial uses, whereas Bitcoin is primarily a speculative, volatile asset and is also used for illicit activities including ransomware, money laundering, sanctions evasion, and terrorist financing. It is also used for.
While we have approved the listing and trading of certain spot bitcoin ETPs today, we have not endorsed or supported Bitcoin. Investors need to be mindful of the numerous risks associated with Bitcoin and crypto-based products.