On Feb. 10, U.S. Securities and Exchange Commission Chairman Gary Gensler appeared on CNBC to discuss a recent enforcement action against cryptocurrency trading platform Kraken.
In the interview, Gensler emphasized the importance of full, fair, and truthful disclosure for investment contracts and investment schemes offered to the American public.
In a related development, ETF Store President Nate Geraci tweeted that the SEC is unlikely to approve a spot Bitcoin exchange-traded fund (ETF) anytime soon.
In his tweet, Geraci noted that Gensler stated that the SEC would not approve such a product until cryptocurrency exchanges are regulated.In the interview, Gensler emphasized the "basic bargain" in the United States, which requires companies offering investment contracts and investment schemes to provide full, fair, and truthful disclosure to the investing public. He stated that "the labels don't matter," and that the underlying economics are what is important.
He also made it clear that whether an investment is referred to as lending, earning, yield, or APY, it does not matter as long as it is compliant with the basic bargain of full disclosure.
Gensler's comments have significant implications for the future of spot bitcoin ETFs. According to Geraci, even if the SEC loses the Grayscale lawsuit, it is more likely that the SEC will force the delisting or closure of futures-based products than approve a spot bitcoin ETF.
The formidable regulator greenlit a futures-based ETF back in October 2021, spurring a major rally.
This development is a disappointment for investors and industry participants who have been eagerly awaiting the approval of a spot bitcoin ETF.
The lack of regulation of cryptocurrency exchanges has been a major obstacle to the approval of such a product, and Gensler's comments suggest that this obstacle is unlikely to be removed anytime soon.
The SEC's emphasis on regulation and full disclosure, combined with the lack of regulation of cryptocurrency exchanges, is likely to delay the approval of such a product for the foreseeable future.