Despite recent approvals by the Securities and Exchange Commission (SEC) for Bitcoin ETFs, the agency’s Chair, Gary Gensler, appears to be anything but enthusiastic about the decision. His lack of enthusiasm was evident during a pair of interviews on Wednesday, where he expressed his concerns about the potential risks associated with Bitcoin.
Gensler Doubles Down on Bitcoin Concerns
Gensler reiterated that the approval of Bitcoin ETFs is not an endorsement of the cryptocurrency but rather a response to a court decision. The SEC was criticized in the Grayscale v. SEC case in August for previously approving Bitcoin futures products while rejecting spot ETFs. The agency, according to Judge Neomi Rao, “failed to reasonably explain” its previous stance.
“While we had denied two dozen of these, a court in Washington said we did not get that right, and it got remanded to us. The most sustainable thing to do is to approve these given the court ruling,” Gensler told Bloomberg News.
Concerns Over Risks and Misuse
In the interviews with Bloomberg and CNBC, Gensler expressed his worries about Bitcoin’s association with illicit activities and the large number of unregulated crypto exchanges. He pointed out that the recently approved ETFs are Bitcoin-specific, without providing a reason why Ethereum was not given similar consideration.
“This is a field that has been rife with fraud and manipulation, and look at all the bankruptcies,” Gensler stated, highlighting the potential misuse of the currency. He also acknowledged that even though traditional currencies are sometimes used illegally, they play a crucial role in supporting established economies, unlike cryptocurrencies.
SEC’s Stance on Crypto
Gensler clarified the SEC’s stance amid criticisms following the ETF approvals. He asserted that the agency remains objective and impartial. “We’re merit neutral if someone is complying with the law,” he said.
He shared his skepticism about crypto trading platforms, Bitcoin’s volatility compared to other assets, and the lack of use cases for many cryptocurrencies. Gensler emphasized that a significant portion of Bitcoin is traded on non-compliant platforms, posing substantial challenges.
“We really do look to ensure as best we can there’s no fraud or manipulation,” Gensler stressed, “but one of the challenges of the Bitcoin market is that so much is traded on trading platforms that are not compliant with our laws.”
Despite the recent approvals, it’s clear that Gensler and the SEC still have numerous concerns about the potential risks and misuse of cryptocurrencies. As the digital currency landscape continues to evolve, it remains to be seen how regulatory bodies will balance the need for innovation with the protection of investors.
