Securities and Exchange Commission Chairman Gary Gensler this week cast the deciding vote to approve several spot Bitcoin exchange-traded funds (ETFs). The move gives the top cryptocurrency a level of Wall Street legitimacy that Gensler has long opposed. So why the sudden change of heart?
key point
- Trading volume for the newly approved spot Bitcoin ETF surged past $5 billion in the first two days after launch.
- SEC Chairman Gary Gensler remains highly skeptical of cryptocurrencies, warning that Bitcoin is a “highly speculative and volatile asset” primarily used for “illicit activities.”
- Grayscale court ruling, August 2023 It was a key factor Why the SEC Approved Bitcoin ETF
- Major firms such as Vanguard, Merrill Lynch, Edward Jones, and Northwestern Mutual are not yet offering new Bitcoin ETFs to their clients.
- Gensler’s legacy as a “crypto cop” is now in question after he cast the decisive vote to approve a spot Bitcoin ETF.
Despite warnings about Bitcoin’s volatility, potential for manipulation and its use in illicit transactions, trading in newly approved ETFs has exploded. Trading volume surged past $5 billion in the first two days, suggesting significant pent-up demand from investors.
But Gensler remains skeptical. In a CNBC interview after the vote, he called Bitcoin a “highly speculative, highly volatile asset” used primarily by criminals. His anti-crypto rhetoric suggests that political pressure or court rulings have forced his hand.
Just came in: ??????? SEC Chairman Gary Gensler said: #Bitcoin It is a “highly speculative and volatile asset” used for “money laundering and ransomware.” pic.twitter.com/QwPMNLLtfQ
— Bitcoin Magazine (@BitcoinMagazine) January 12, 2024
The pressure comes from Grayscale, where Bitcoin Trust (GBTC) recently accounted for nearly half of ETF trading volume. The company sued Grayscale last June after the SEC rejected the company’s application for a spot Bitcoin ETF.
Grayscale got the upper hand when a federal judge ruled that the SEC had to do a better job of justifying the discrepancy between its treatment of Bitcoin spot ETFs and futures ETFs. Gensler acknowledged that the decision “changed” the calculus on approvals.
By giving in to the courts, Gensler’s legacy as a “crypto cop” is now in shambles. In appointing a lawyer with a history of cryptocurrency skepticism to lead the SEC, President Biden hoped Gensler would bring order to the “wild west” of digital assets.
Far from validating the SEC’s criticism of manipulation and volatility, the successful launch of these ETFs proves that both institutional and retail investors see tremendous value in cryptocurrency technology. The genie can’t be put back in the bottle. Blockchain-based digital assets are here to stay. And despite bureaucratic resistance, capitalist free markets will continue to fund the benefits of blockchain innovation until they permeate global finance.
True cryptocurrency regulation requires nuance, not scaremongering or sabotage. Rather than stifling American innovation in pursuit of the impossible dream of total central control, policymakers should promote freedom while enacting reasonable safeguards against fraud. The SEC would be wise to shift its focus from attacking cryptocurrency companies to fostering communication and collaboration with them.
Regulators may slow it down from time to time, but nothing can stop the cryptocurrency revolution now. Despite Gensler’s objections, the flood of ETF investments shows the world has already voted. The economic future will be decentralized.