The historic Spot Bitcoin ETF approval Wednesday was accompanied by a statement by SEC Chairman Gary Gensler stressing the agency "did not approve or endorse Bitcoin."
What Happened: Following the Twitter account hack false start one day earlier on the historic approval of the first U.S. Spot Bitcoin exchange-traded funds, the Securities and Exchange Commission approved all 11 applicants Wednesday.
The SEC followed up its approval with a press release by Chair Gary Gensler, saying the approval "is cabined to ETPs holding one non-security commodity, bitcoin." It further states "the vast majority of crypto assets are investment contracts and thus subject to the federal securities laws" and the decision does not "approve or endorse bitcoin."
The press release specifically highlights the "contrast" between Bitcoin and metals ETPs with "consumer and industrial uses."
Bitcoin BTC/USD, Gensler said, "is primarily a speculative, volatile asset that’s also used for illicit activity including ransomware, money laundering, sanction evasion, and terrorist financing."
Why It Matters: The statement reaffirms Gensler's long-standing belief that the cryptocurrency sector is susceptible to "fraud, scams, bankruptcies, and money laundering."
It also echoes Gensler's statement of Jan. 9, only a day before the SEC approved the ETFs, how there are "serious risks involved" in cryptocurrency investing. Interestingly enough, the press release's closing lines read eerily similar to the views of JPMorgan Chase & Co. Jamie Dimon, who slammed Bitcoin for having "no value" and cited similar use cases.
What's Next: The statement can be interpreted as an effort to slam the brakes on a potential hype train the ETF approval may set in motion.
Cathie Wood, CEO of Ark Invest, one of the approved funds, sees the approval as a "price-moving event" for Bitcoin. She hopes other exchange-traded products can be approved more quickly following this decision, which is likely the kind of enthusiasm the press release aims to curb.
Bitcoin advocates on X (formerly Twitter) were unsurprisingly dismissive of Gensler's tone in the press release.
Alexander Leishman, CEO of River, a Bitcoin-only financial institution, wondered tongue-in-cheek whether Gensler was "talking about the USD," citing Bitcoin's alleged illegal use cases.
Dylan LeClair, head of market research at BTC Inc, simply responded: "Coping and seething."
Sean Tuffy, former head of market and regulatory intelligence at Citi, said "Gensler is salty about it," referring to Gensler's grudging admittance of Bitcoin into the circle of traditional finance products.
Benzinga's Take: While Gensler may have come across as "salty" to Bitcoin advocates, one set of ETFs does not necessarily beget another. Those waiting for a potential Ethereum ETF should not get overly excited by today's decision just yet.
Photo via Shutterstock.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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