In a recent conversation with Bloomberg, U.S. Securities and Exchange Commission (SEC) chair Gary Gensler expressed his skepticism towards spot Bitcoin exchange-traded funds (ETFs). Gensler, who has recently introduced new rules to reduce risk in the U.S. Treasury market, highlighted the significance of Treasury markets in funding the government and conducting monetary policy. While acknowledging the existence of pending spot Bitcoin ETF applications, Gensler downplayed their importance and cited concerns about non-compliance in the crypto market.
The SEC has implemented new rules aimed at reducing risk in the U.S. Treasury market. These rules include a requirement for a higher number of trades to go through clearing houses and the introduction of collateral requirements for central clearing agencies. Gensler believes that these rules are necessary to ensure stability and mitigate risks in the $26-trillion-dollar Treasury market, which serves as the foundation of the entire capital market.
When asked about the pending spot Bitcoin ETF applications, Gensler emphasized the greater significance of the Treasury market in funding the government, conducting monetary policy, and maintaining the global dominance of the dollar. He highlighted the smaller scale of crypto securities and the potential harm that investors have experienced in the crypto market due to non-compliance. Gensler’s remarks indicate his belief that the focus should be on regulating and ensuring compliance in the Treasury market rather than prioritizing the approval of crypto ETFs.
Although Gensler downplayed the importance of crypto ETFs, he acknowledged the existence of several spot Bitcoin ETF applications that are currently pending. He mentioned that the SEC’s staff from various divisions are actively responding to these applications. Additionally, Gensler mentioned a court outcome that likely requires the SEC to consider Grayscale’s ETF conversion application. While Gensler did not directly address whether the SEC’s engagement with these applications signifies progress, he has previously met with many spot Bitcoin ETF applicants and amendments have been submitted by several applicants, including BlackRock.
Despite Gensler’s reservations and the SEC’s silence on the potential approval of a spot Bitcoin ETF, some industry members remain optimistic. Bloomberg ETF analysts Eric Balchunas and James Seyffart have suggested that there is a 90% chance of a spot Bitcoin ETF receiving approval by January 10, 2024. Their optimism likely stems from the increasing interest and demand for crypto investments among institutional investors.
The conversation between Bloomberg and SEC chair Gary Gensler shed light on the importance of Treasury markets in funding the government and conducting monetary policy. While Gensler expressed skepticism towards spot Bitcoin ETFs and emphasized the need to address non-compliance in the crypto market, he acknowledged the existence of pending applications. The future of spot Bitcoin ETFs remains uncertain, but some industry analysts remain hopeful for their approval in the near future.