SEC Commissioner Criticizes Approval of Spot Bitcoin ETFs
Date: 2024-01-13 Author: Dima Zakharov Categories: BUSINESS
SEC Commissioner Expresses Concerns
The recent approval of Bitcoin ETFs by the SEC has drawn both praise and criticism. Among those voicing concerns is SEC Commissioner Caroline Crenshaw. She believes that the decision puts investors at risk and undermines the SEC's core mandate of protecting them.
Crenshaw argues that issuers of these products are still unable to prevent fraud and manipulation effectively. This concern has been a key factor in the SEC's rejection of previous spot Bitcoin ETF applications, and Crenshaw sees no reason to change this stance.
She highlights the difficulty that issuers face in obtaining accurate price information, especially as fraudulent trading volumes on unregulated platforms reach as high as 77.5%. Even major players like Binance and Coinbase have faced regulatory actions.
Market Manipulation Concerns
Crenshaw also points out that the relatively small size of the market allows whales and large miners to manipulate prices in their favor. She cites known cases to support her argument.
Regarding the arguments made in the Grayscale vs. SEC case, Crenshaw emphasizes that futures-based and spot Bitcoin ETFs are not the same product. The former are based on derivatives under CFTC jurisdiction, while the latter rely on physical assets traded globally without SEC oversight. Furthermore, financial markets in the U.S. are regulated in a fragmented manner.
Support for Bitcoin's Potential
Despite her criticism, Crenshaw acknowledges the potential of Bitcoin as an asset that eliminates intermediaries, expands access to financial services, and promotes personal freedom. However, she questions why many cryptocurrency applications seem to recreate the existing financial system with less regulation, more opacity, reduced investor protection, and increased risk.
Hester Peirce, another SEC commissioner known for her pro-cryptocurrency stance, has previously expressed support for spot Bitcoin ETFs. Mark Ueda, on the other hand, welcomed the SEC's approval but raised concerns about certain aspects of the decision.
SEC Chairman Gary Gensler had warned about the risks of Bitcoin just before the approval, suggesting that recent legal decisions influenced the agency's approach.
Traditional financial institutions in the U.S. have had varying reactions to the introduction of spot Bitcoin ETFs, ranging from embracing them to imposing restrictions.
