The Chair of the United States Securities and Exchange Commission (SEC), Gary Gensler, has raised eyebrows with his approach to Bitcoin exchange-traded fund (ETF) applications, leading experts from Bloomberg to suggest a surprising turn of events.
Dave Nadig, a prominent ETF commentator, recently engaged with Bloomberg ETF specialists James Seyffart and Eric Balchunas on October 31, speculating that Gensler might be intentionally allowing Bitcoin ETF applications to accumulate, possibly with the intention of rejecting them collectively. Nadig's theory posits that this could be a dramatic twist by Gensler. In response, Seyffart acknowledged having considered such a scenario for some time and emphasized the significant impact it could have.
Balchunas weighed in on this hypothetical move, describing it as intense and speculating that it could lead to numerous legal actions. However, he did recognize the slight possibility of a last-minute rejection, contributing to their cautious assessment of approval chances exceeding 90%.
Gensler's stance on Bitcoin ETFs has come under scrutiny recently, with a 2019 clip surfacing in which he described the SEC's then-position on such products as "inconsistent."
Historically, the SEC has consistently denied Bitcoin ETF applications since 2017. Under Gensler's leadership since his appointment in 2021, this trend has continued. The SEC has consistently expressed reservations, delaying or rejecting applications for Bitcoin ETFs, with a focus on investor safety.
In June 2022, Grayscale, a cryptocurrency asset management firm, took legal action against the SEC, led by Gensler, following their refusal to convert Grayscale's existing Bitcoin trust into an ETF. The court ruled in favor of Grayscale, deeming the SEC's decision unjustified. However, the SEC chose not to contest the court's verdict.
To date, the SEC has only approved Bitcoin and Ether futures ETFs, arguing that spot products lack sufficient safeguards against potential market misconduct.