Could the SEC chief pull the plug on Bitcoin ETFs?
There's a possibility that Gary Gensler, the head of the United States Securities and Exchange Commission (SEC), could deny all spot Bitcoin exchange-traded fund (ETF) applications in one dramatic move, according to analysts at Bloomberg ETF. In a tweet, ETF commentator Dave Nadig suggested that Gensler might be allowing the applications to pile up just to reject them all at once in a "semi-comedic rug-pull."
An "amazingly sadistic" scenario
While analysts believe this scenario is unlikely, they admit that it has crossed their minds. James Seyffart, a senior Bloomberg ETF analyst, described the idea as "epic," and Eric Balchunas, another analyst, called it "amazingly sadistic" and predicted it would lead to a wave of lawsuits.
Gensler's position on Bitcoin ETFs
Gensler's stance on spot Bitcoin ETFs has gained attention recently, with a video from 2019 showing him describing the SEC's position on these products as "inconsistent." The SEC has a history of denying spot Bitcoin ETF applications, and Gensler has continued this trend since becoming the head of the SEC in 2021. He has cited concerns about investor protections and has delayed and pushed back recent applications.
A lawsuit against the SEC
In 2022, crypto asset manager Grayscale sued the Gensler-led SEC for rejecting its bid to convert its existing Bitcoin trust into a spot ETF. The court ruled that the SEC's decision was "arbitrary and capricious," but the SEC did not appeal. So far, the SEC has only approved ETF applications for Bitcoin and Ether futures products, claiming that spot products lack sufficient safeguards against market manipulation.
