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SEC Chair Warns of Crypto Risks Amid Spot Bitcoin ETF Decision

United States Securities and Exchange Commission (SEC) Chair Gary Gensler recently took to social media platform X, formerly known as Twitter, to address crypto investors and asset managers eagerly awaiting the verdict on their spot Bitcoin exchange-traded fund (ETF) applications.

In his January 8th post on X, Gensler urged crypto investors to exercise caution without explicitly mentioning the spot Bitcoin ETF.

He emphasized that asset managers might not be in compliance with federal securities laws when offering crypto investment products.

Gensler also highlighted the inherent risks and volatility associated with cryptocurrencies.

He warned about fraudulent activities targeting retail investors, such as bogus coin offerings, Ponzi and pyramid schemes, and outright theft where project promoters disappear with investors’ funds.

Gensler’s remarks, posted at 3:40 pm UTC, coincided with several spot Bitcoin ETF issuers submitting amended S-1 applications to the SEC.

This step represents one of the final stages in potentially gaining approval for these investment vehicles in the United States.

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The outcome remains uncertain at the time of writing, as multiple applications have been submitted by entities including Valkyrie, WisdomTree, BlackRock, VanEck, Invesco, Galaxy, Grayscale, ARK Invest, 21Shares, Fidelity, Bitwise, and Franklin Templeton.

Critics have voiced their discontent with Gensler over the SEC’s failure to approve a spot crypto ETF despite years of applications from various asset managers.

In contrast, Canadian regulators permitted firms to list spot Bitcoin ETFs on exchanges starting in 2021.

The S-1 filings on January 8th were anticipated, stemming from a deadline set by the SEC following a series of 19b-4 filings on January 5th.

While these actions indicate progress toward allowing crypto ETF listings on U.S. exchanges, they do not guarantee approval.

The commission still holds the option to deny applications, but any such denial would likely require different grounds than those previously used for other ETFs.

In August, a federal judge ordered the SEC to reconsider its rejection of Grayscale’s spot BTC ETF application, citing that the commission’s decision was “arbitrary and capricious.”

This ongoing debate highlights the complex and evolving regulatory landscape surrounding cryptocurrencies and ETFs in the United States.

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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.

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