United States Securities and Exchange Commission Chairman Gary Gensler has issued a warning to those looking to invest in crypto assets ahead of the possible approval of the Spot Bitcoin ETF.
A thread 🧵
Some things to keep in mind if you're considering investing in crypto assets:
— Gary Gensler (@GaryGensler) January 8, 2024
On January 8, US Securities and Exchange Commission Chairman Gary Gensler issued a cautionary message to crypto investors in a thread on the social media platform X (formerly Twitter). While Gensler didn’t specifically mention a Bitcoin ETF, he urged crypto investors to consider certain factors.
Gensler emphasized that asset managers offering crypto investment vehicles “may not be in compliance with federal securities laws.” He highlighted the exceptional risk and volatility associated with cryptocurrencies and warned investors that they may be missing important information and protections when investing in crypto asset securities. Gensler pointed to cases where major platforms and crypto assets have defaulted or lost value, highlighting the ongoing significant risks of crypto investments.
3⃣Fraudsters continue to exploit the rising popularity of crypto assets to lure retail investors into scams. These investments continue to be replete w/ fraud- bogus coin offerings, Ponzi & pyramid schemes, & outright theft where a project promoter disappears w/ investors’ money.
— Gary Gensler (@GaryGensler) January 8, 2024
The Securities and Exchange Commission chairman warned investors about widespread fraud in the crypto space, where fraudsters are exploiting the growing popularity of crypto assets to dupe retail investors through scams such as fake coin offerings, Ponzi and pyramid schemes, and outright theft. Gensler urged investors to remain vigilant to avoid falling victim to fraudulent activities.
While Gensler gave no explicit indication of the SEC’s stance on the Bitcoin spot ETF, some observers see his comments as a final statement before the agency makes decisions on ETF applications as they approach key deadlines. Allowing fully regulated spot ETFs could make digital asset trading easier for a wider range of investors and potentially lead to significant inflows into the crypto industry .
The Securities and Exchange Commission under Gensler’s leadership, has been actively addressing cryptocurrency companies’ compliance with securities laws. The legal battles over the SEC’s regulatory approach have produced mixed results, with some judges finding the agency on the wrong side of the arguments. However, the Securities and Exchange Commission has also won victories, including a recent ruling in the Terraform Labs case , which upheld the regulator’s stance regarding the company’s improper promotion of unregistered cryptocurrency securities.
SEC Expected to Decide on Applications for Spot Bitcoin ETFs Amid Growing Anticipation
The statement comes amid expectations that a spot Bitcoin ETF could receive its first approval in the United States this week. Bloomberg recently increased its forecast and now estimates a 95% chance of approval .
A decision is expected in the coming days , especially because the Securities and Exchange Commission has until January 10 to respond to the first filing in the latest wave, filed by ARK Investment and 21Shares.
Various well-known firms including Valkyrie, WisdomTree, BlackRock, VanEck, Invesco, Galaxy, Grayscale, Fidelity, Bitwise and Franklin Templeton have also submitted their applications for Bitcoin spot ETFs. The Securities and Exchange Commission decision on these applications is still uncertain, and it is unclear whether they will be approved simultaneously or individually.
With exchanges including Nasdaq, NYSE and Cboe filing amended Forms 19b-4 on Friday, the Securities and Exchange Commission is now in a position to make a decision. If these forms are approved, trading can begin once the parallel process of S-1 forms has become “effective.”
However, analysts note that the Securities and Exchange Commission has broad powers in this process and may consider delaying the decision again. SEC Chairman Gensler faced criticism because the Securities and Exchange Commission delayed approval for a crypto spot ETF despite multiple applications from asset managers spanning several years.
The Securities and Exchange Commission Chairman Gary Gensler has not given a clear indication of his stance in his recent comments, which align with previous warnings he has issued to crypto investors. In August, a federal judge ordered The Securities and Exchange Commission to reevaluate a spot BTC ETF application from Grayscale, saying the commission’s rejection of the investment vehicle was “arbitrary and capricious.”
At the end of November, Gensler refrained from commenting hastily on the ongoing review process for Bitcoin spot ETFs, emphasizing the agency’s “tried and tested” review process.
The Securities and Exchange Commission retains the ability to reject applications, although it would likely require different reasons than those previously given for rejecting other ETFs.
