A dissenting SEC commissioner has expressed disapproval of the Bitcoin spot ETFs and highlighted the reasons for this.
In the last 24 hours, the crypto world has been in a state of celebration thanks to the announcement of the Bitcoin spot ETF approval. Several firms, including BlackRock and Grayscale, have seen their applications given the green light by the SEC in what is a history-making event.
But now, a commissioner from the SEC has released a statement saying that the products approved by the commission are not actually ETFs but ETPs.
Are ETFs Not a Reality Yet?
This statement came from Commissioner Caroline A. Crenshaw on January 10, 2024, and apparently gives some clarity about the situation. In it, she publicly dissented from the decision of the SEC and claimed that it would put investors further at risk.
“These Commission actions are unsound and ahistorical. And worse, they put us on a wayward path that could further sacrifice investor protection,” she said.
Her statement went on to outline the reasons for her disapproval of the SEC’s decision. First, she claims that the underlying asset market that is tied to the ETFs is rife with fraud and manipulation. She also notes that Bitcoin spot markets exist all over the world, even outside of the SEC’s jurisdiction.
Commissioner Crenshaw especially noted the prevalence of wash trading in crypto markets around the world. Citing a study of 29 major crypto exchanges, the commissioner said that wash trading constitutes too high of a percentage of the trading volumes for Bitcoin and other cryptos. Other examples noted in her public statement were the issues uncovered at the now-defunct exchange FTX, the legal resolution of which is still ongoing.
The hacking of the SEC’s social media accounts in the last few days was also mentioned. The hackers had put out a fake statement about Bitcoin’s ETF approval and the price of the asset was instantly impacted. This, the commissioner argues, underscores the dangers of the Bitcoin market.
Another thing noted in the statement was the concentration of Bitcoin ownership. Mining and ownership of bitcoin tends to be concentrated in the hands of only a few and this creates a situation in which investors are at the whims of a few whose decisions can make or mar the market.
But perhaps the most striking thing mentioned was the difference between exchange-traded products (ETPs) and exchange-traded funds (ETFs). She explained that the commission had previously released products that were designed to hold Bitcoin futures but not spot or physical Bitcoin. Throughout the statement, the commissioner used the term ETPs and not ETFs, which casts some doubt about whether the industry truly has an ETF just yet. Several firms that were granted approval used the term ETF and it is left to be seen if there is any discrepancy at play.