In a recent interview on Bloomberg Television, Gary Gensler, the Chair of the Securities and Exchange Commission (SEC), addressed the topic of cryptocurrency and its relation to the U.S. Treasury market. When asked about the status of spot bitcoin ETF applications, Gensler was cautious in his response, highlighting the significance of the Treasury market and downplaying the importance of crypto securities.
Gensler stated, “The U.S. Treasury market is a very consequential, very important market. Crypto securities are not only much smaller, it’s not how we fund our government. It’s not how we conduct monetary policy.” He emphasized the potential harm that investors in the crypto market may face due to non-compliance with securities laws and regulations.
The SEC’s Review of Spot Bitcoin ETF Applications
Currently, the SEC is reviewing several applications for the launch of the first spot bitcoin fund in the United States. Prominent asset management firms such as BlackRock and Fidelity are among the companies seeking approval. The speculation surrounding the SEC’s decision has contributed to the recent surge in the price of bitcoin, which holds approximately $838 billion of the total crypto market capitalization of nearly $1.7 trillion.
While Gensler refrained from providing specific details about the ongoing review process, he emphasized that the SEC’s approach is “time-tested.” The agency has been engaging in discussions with potential issuers, focusing on technical aspects related to proposed redemption processes. Meetings with federal regulators have taken place, indicating the growing interest and efforts surrounding Bitcoin ETF applications.
The Prospect of BlackRock’s Application
BlackRock, one of the leading asset management firms, stands out as it has recently made amendments to its spot bitcoin ETF application. These amendments aim to facilitate participation from large banks by introducing new shares in the fund that can be purchased with cash, expanding the options beyond solely using cryptocurrencies.
The SEC is expected to make a decision on BlackRock’s application by January 15, with the final deadline set for March 15. The agency has historically denied or delayed spot bitcoin ETFs due to concerns over market manipulation and investor protection. However, following a landmark lawsuit loss to Grayscale Investments in August, the SEC has been collaborating more closely with a dozen firms to explore the possibility of bringing such funds to the market.
Many industry participants, including Cathie Wood of ARK Invest, believe that the SEC will approve multiple applications simultaneously to prevent any single firm from gaining a first-mover advantage.
