- SEC Chair Gensler is expected to reject all spot bitcoin ETF proposals in January 2023 due to concerns around potential market manipulation and illicit activities.
- While the SEC has approved bitcoin futures ETFs, Gensler believes there is not enough regulation and surveillance around the underlying bitcoin market for a spot ETF.
- Approval of a spot bitcoin ETF in the U.S. remains unlikely without major regulatory changes, with another country potentially having to approve one first to put pressure on the SEC.
SEC Chair Gensler is not embracing crypto in the U.S., and it might even be a very long shot to expect that he would vote to approve bitcoin spot ETFs, according to Matrixport.
SEC to Reject Spot Bitcoin ETF Proposals
SEC Chair Gary Gensler has made it clear that he is not in favor of approving a spot bitcoin exchange-traded fund (ETF) any time soon. Gensler believes there are issues around custody and surveillance that need to be addressed before a spot bitcoin ETF can be approved.
Matrixport, a cryptocurrency financial services company, stated that Gensler is not embracing crypto in the U.S. In fact, Matrixport said that “it might even be a very long shot to expect that [Gensler] would vote to approve bitcoin spot ETFs.”
The SEC is set to make decisions on several spot bitcoin ETF applications in January 2023. However, based on Gensler’s stance, Matrixport expects that all of these proposals will be rejected.
Past Bitcoin ETF Rejections
This would not be the first time that the SEC rejects spot bitcoin ETF applications. The regulatory agency has turned down every spot bitcoin ETF proposal submitted so far, citing concerns around potential market manipulation and illicit activities.
The SEC has, however, approved several bitcoin futures ETFs. These provide exposure to bitcoin futures contracts rather than the digital asset itself. Prominent examples include the ProShares Bitcoin Strategy ETF and Valkyrie Bitcoin Strategy ETF.
According to Matrixport, the difference comes down to surveillance. The SEC believes there is sufficient regulation and surveillance around futures that is not present in the underlying bitcoin market.
Outlook for Bitcoin ETF Approval
It remains unclear when the SEC might approve a spot bitcoin ETF. The regulatory environment would likely have to change significantly for Gensler to reconsider his stance.
Matrixport believes the most likely scenario is that another country approves a spot bitcoin ETF first. This could then put pressure on the SEC to follow suit. However, the firm warns that the road to approval still looks lengthy without major regulatory changes.
Conclusion
Matrixport believes the SEC will reject all spot bitcoin ETF applications submitted in January 2023. SEC Chair Gensler has repeatedly voiced concerns around potential manipulation and illegal activities. While bitcoin futures ETFs have been approved, Gensler does not believe there is sufficient surveillance and regulation around the bitcoin market itself.
The outlook for a spot bitcoin ETF approval in the U.S. remains bleak without significant regulatory changes. Matrixport thinks approval may only come once another country greenlights a spot bitcoin ETF. This could force the SEC’s hand. However, it underscores the major obstacles still facing a spot bitcoin ETF in the U.S.
