Damning report highlights SEC failure to approve bitcoin spot ETF

Table of Contents

• Harm to investors
• Unprecedented requirement
• Damning conclusions

The Digital Chamber of Commerce has released a report that highlights its concern over the SEC failure to approve a bitcoin spot ETF.

A report released today by the Digital Chamber of Commerce is titled “The Crypto Conundrum - Why won’t the SEC Approve a Bitcoin ETF?”.

Harm to investors

The report highlights the harm that has been caused to investors by not being able to invest in a properly regulated Bitcoin spot ETF.

To date, at least 16 companies have applied to the SEC for approval of a U.S. Bitcoin spot ETF. All have been denied, with some being given the thumbs-down more than once.

The SEC has continued to use the same justifications, and even given that the bitcoin market has matured, and that institutions have entered with some significance, the SEC stance has not changed.

Unprecedented requirement

One of the SEC requirements is unprecedented and appears to be solely targeted at bitcoin. It requires proof that price discovery occurs on the CME, rather than on the larger crypto exchanges such as Coinbase or Gemini.  

Based on this, the report underlines that two particularly sophisticated industry participants have designed and researched programs that do show that bitcoin price discovery is in fact occurring on the CME, but this has still not cut any ice with the SEC.

A failure of the SEC to pay heed to the fulfilment of this requirement is said by the report to put a damper on any other company going to the expense of researching the issue if it is only going to be ignored by the regulator.

Damning conclusions

The report summed up by giving its view of the probable motives behind SEC Chair Gensler’s refusal to grant the spot EFT:

“It is becoming clear that Chairman Gensler does not intend to approve a Bitcoin ETF until the SEC’s authority to regulate is expanded to cover the cryptocurrency exchanges, whether that be through legislation, unilateral SEC rulemaking or SEC enforcement actions, creating a belief among market participants that the true pretext for the application denials is not based on any unmet legal standard but rather as a means of effectuating a jurisdictional land grab.”

The final paragraph in the report was particularly damning:

“Unfortunately, it is becoming increasingly probable that it will take litigation or focused efforts by Congress to break through the SEC’s increasingly arbitrary and unwarranted treatment of this important investment product. Moreover, if the SEC’s ability to transform itself into a merit-based regulator goes unchecked, the future of innovation and capital raising in the United States will be dark indeed.”

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.