The SEC’s position on cryptocurrency ETFs connected to Bitcoin futures, according to Michael Sonnenshein, CEO of cryptocurrency behemoth Grayscale Investments, is irreconcilable with earlier remarks from SEC officials.
Gary Gensler, the current chairman of the Securities and Exchange Commission, said in early August that the US Securities and Exchange Commission would soon be able to allow access to the BTC-ETF, a mechanism that makes it easier for investors to buy the most popular cryptocurrency on the market. They will not only be able to implement it in a handy form of shares, but they will also be able to boost Bitcoin’s total liquidity.
At the Aspen summit, Gensler stated that the Bitcoin ETF linked to CME futures is especially excited about. In other words, the SEC may only approve ETFs that are linked to the futures market through synthetic contracts tied to the future price, not bitcoin-backed ETFs.
Many bitcoin community members were upset by the SEC chairman’s explanation since they had been waiting for years for Bitcoin ETFs to be approved. Moreover, the announcement was particularly depressing because the first BTC-ETFs had already been approved in Canada and a few European nations.
According to Grayscale Investments’ CEO, this is nothing more than an attempt to “focus on the first child while entirely overlooking the second.” However, given that the Sonnenshein business filed the first application for a Bitcoin ETF in 2016, they have every cause to be dissatisfied with the American department’s conduct.
Sonnenshein said that the SEC has authorized over a thousand ETFs that are not connected to the futures market in recent years and that their initial concerns to BTC-ETFs due to possible asset value manipulation under the influence of insiders are also relevant to ETFs tied to the futures market.
He also argued that such a decision might be tied to a US legislation passed in 1940 that provided more investor protection than the 1933 regulation governing stock market-linked ETFs. At the same time, it does not contain anything that may pose a problem for the SEC in approving Grayscale’s spot Bitcoin ETF. The law’s provisions allow a company’s board of directors to be independent, which Grayscale, of course, possesses. However, much like any other company whose stock is traded on the NYSE or NASDAQ,
According to Sonnenshein, the SEC’s issue may be the expense of developing a BTC-ETF tied to futures rather than a spot market, which would already be more expensive for consumers. Furthermore, most ordinary investors are unlikely to take the risk of buying Bitcoin futures ETFs on the derivatives market. So the department’s action will scare them away.
Concerns about the spot BTC-potential ETFs to destabilize the entire market may have influenced the US Securities and Exchange Commission’s restrictions. To avoid this, the SEC plans to require market participants to earn “impressive trading margins,” thereby weeding out even more people who wanted to get into the crypto ETF market.
Meanwhile, the SEC has hundreds of cryptocurrency exchange-traded funds (ETFs) “on the table” for consideration, but it continues to put them off.