In a recent interview In collaboration with CNBC, Gary Gensler, Chairman of the US Securities and Exchange Commission (SEC), provided information on the status of bitcoin spot. ETF Applications and highlighted concerns about alleged non-compliance and fraud within the crypto industry.
Previous Are bitcoin ETF denials re-evaluated?
During the interview, Gensler acknowledged that the SEC has received between eight and twelve presentations for spot bitcoin ETFs, with the next approval window expected in early January.
Gensler emphasized that as chair of the commission, he refrains from prejudging any bitcoin ETF applications, and the process is currently underway.
Gensler also mentioned that previous denials of such requests have been reevaluated due to court rulings in the District of Columbia, prompting the SEC to examine the matter again. Gensler further stated on the matter:
I shouldn't prejudge anything. So, that's going through the process right now. And as you probably know, we had denied several of these requests in the past, but the courts here in the District of Columbia intervened. And that's why we're looking at this again based on those court rulings.
Fraud Concerns in the crypto Industry
When discussing the crypto industry in general, Gensler expressed concern over the assumptions breach with securities laws and other regulations, including anti-money laundering (AML) measures.
Despite a “fresh look” at bitcoin ETF applications, the SEC chairman highlighted the prevalence of “fraud and bad actors” within the field, noting that the
The “lack of fundamental information” about many projects poses significant risks for investors.
Additionally, Gensler criticized the “mixing” and “questionable practices” of brokers in crypto exchanges, highlighting that such behavior would not be tolerated in traditional financial systems. The SEC Chairman further stated:
There is a lot of non-compliance, not only with securities laws but also with other laws related to money laundering and protecting the public from bad actors. And I would like to point out that this is a field in which we still do not have fundamental information about many of these projects. And the middlemen on so-called cryptocurrency exchanges are mixing in and doing things we don't allow anywhere else in our financial system.
“The cryptocurrency market still looks like the wild west”
Addressing the perception that fraud has been eliminated from the crypto industry, Gensler provided a contrasting point of view. Gensler emphasized that repeated bankruptcies and fraud casesalong with the SEC's enforcement efforts of approximately 150 to 175 successful settlements or litigation, demonstrate that the cryptocurrency market remains akin to the “Wild West” globally.
Gensler stressed the need to increase investor confidence and protection, as many people have suffered financial losses and have only had to face bankruptcy proceedings.
Overall, despite recognition of the importance of bitcoin ETF applications, there is no indication of an imminent shift in the approach to application or discussion of regulatory frameworks that could foster innovation and instill confidence among US exchange clients and crypto companies.
However, as institutions continue to make changes and updates to their bitcoin ETF applications, there is optimism about a positive outcome in early January 2024. However, the realization of this optimism remains uncertain.
At the time of writing, bitcoin is currently trading at $42,300. Over the past 24 hours, the cryptocurrency has seen a sideways price movement. However, it has managed to hold its crucial support level of $42,000.
Featured image from Shutterstock, chart from TradingView.com