SEC Chair Gensler Keeps Cryptocurrency Industry Guessing on Spot Bitcoin ETFs

The Chair of the Securities and Exchange Commission (SEC), Gary Gensler, remained tight-lipped when questioned by journalists about potential actions concerning spot Bitcoin exchange-traded funds (ETFs) under the agency's review. Speaking at a Healthy Markets Association conference, Gensler refrained from pre-judging the matter, emphasizing the agency's "time-tested process" in its review procedures. The cryptocurrency industry has eagerly anticipated approval for the first spot Bitcoin ETF, with applications from major asset managers like BlackRock and Fidelity currently pending and experiencing delays.

In an interview with Bloomberg TV last month, Gensler outlined the rigorous process involved in bringing exchange-traded products public, likening it to an initial public offering (IPO). The SEC's Division of Corporation Finance provides feedback during this process, while the Division of Trading and Markets scrutinizes the filings. Gensler reiterated this approach, stating that the SEC's Disclosure Review Team plays a crucial role in responding and offering feedback to potential issuers.

The SEC recently held discussions with Invesco and BlackRock representatives to address concerns related to "balance sheet impacts and risks." Gensler, maintaining his perspective that Bitcoin is a commodity, expressed ongoing concerns about the broader crypto industry. The SEC has taken enforcement actions against various crypto firms, including U.S.-based Coinbase and the world's largest crypto exchange, Binance, over the past year.

In response to a reporter's query about Commodity Futures Trading Commission Chair Rostin Behnam's call for increased authority to oversee crypto, Gensler expressed support for the CFTC gaining more control, particularly concerning Bitcoin. Gensler, a former CFTC chair, has previously categorized many cryptocurrencies as securities.

Regarding the SEC's reliance on the Howey Test in lawsuits, Gensler acknowledged criticisms from entities like Coinbase, emphasizing the agency's commitment to addressing bad actors and combating fraud, manipulation, and money laundering in the crypto industry. Drawing parallels between noncompliance in the crypto industry and the 1920s, Gensler urged caution and vigilance, advising potential investors to "beware, be cautious, be careful."