TechFlow has not provided the full text of the U.S. SEC's statement approving Bitcoin spot ETFs. For official documents, please refer to the U.S. Securities and Exchange Commission (SEC) website.
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TechFlow has not provided the full text of the U.S. SEC's statement approving Bitcoin spot ETFs. For official documents, please refer to the U.S. Securities and Exchange Commission (SEC) website.
Investors should remain cautious about the myriad risks associated with products tied to Bitcoin and its value in relation to cryptocurrencies.
Navigating Web3 tides with focused insightsAuthor: Gary Gensler, Chair of the SEC
Compiled by: SevenUp DAO
On January 11, according to Reuters, SEC filings showed that the U.S. Securities and Exchange Commission (SEC) has approved 11 spot Bitcoin ETFs, including those from VanEck, Bitwise, Fidelity, Franklin, Valkyrie, Hashdex, Ark Invest, Grayscale, BlackRock, WisdomTree, and Invesco Galaxy.
Gary Gensler, Chair of the U.S. Securities and Exchange Commission (SEC), released a statement on the SEC website regarding the approval of spot Bitcoin ETFs. The approval was largely due to a ruling by the U.S. Court of Appeals for the District of Columbia Circuit, which found that the Commission failed to adequately explain its reasoning for denying Grayscale's ETF application.
He stated: While we are approving the listing and trading of certain spot Bitcoin ETP shares today, we are neither endorsing nor approving Bitcoin itself.
Investors should remain cautious about the numerous risks associated with Bitcoin and products tied to cryptocurrency values.
Full text below:
Today, the Commission has approved the listing and trading of shares of various spot Bitcoin exchange-traded products (ETPs).
I often say that the Commission acts in accordance with the law and how courts interpret the law. Starting in 2018 under Chairman Clayton, and continuing through March 2023, the Commission denied more than 20 exchange rule submissions for spot Bitcoin ETPs. One of these was proposed by Grayscale, seeking to convert the Grayscale Bitcoin Trust into an ETP.
We now face a series of applications similar to those we previously denied. However, circumstances have changed. The U.S. Court of Appeals for the District of Columbia Circuit ruled that the Commission failed to adequately explain its rationale for denying the listing and trading of Grayscale’s proposed ETP (the Grayscale decision). As a result, the court vacated the Grayscale decision and remanded the matter back to the Commission. Given these developments and the considerations discussed in greater detail in the approval order, I believe the most sustainable path forward is to approve the listing and trading of these spot Bitcoin ETP shares.
The Commission evaluates any rule submission by a national securities exchange to determine whether it is consistent with the Securities Exchange Act and related provisions, including whether it is designed to protect investors and the public interest. The Commission remains neutral and does not express views on specific companies, investments, or the underlying assets of ETPs. If issuers and listing exchanges comply with federal securities laws, the Exchange Act, and Commission rules, they must be granted access to our regulated markets on equal footing with others.
Importantly, today’s Commission action applies only to ETPs holding bitcoin—a non-security commodity—and by no means suggests the Commission would approve listing standards for crypto asset securities. This approval also does not reflect any view by the Commission on the status of other crypto assets under federal securities laws or on the current non-compliance of certain crypto market participants. As I have said before, without prejudging any particular crypto asset, the vast majority of crypto assets are investment contracts and therefore subject to federal securities regulations.
Today, investors already have multiple avenues to buy, sell, or otherwise gain exposure to Bitcoin—through many broker-dealers, mutual funds, national securities exchanges, peer-to-peer payment apps, unregulated crypto trading platforms, and vehicles such as the Grayscale Bitcoin Trust. Today’s action will provide investors with certain protections:
First, sponsors of Bitcoin ETPs will be required to provide full, fair, and truthful disclosures about their products. Investors holding shares in listed and traded Bitcoin ETPs will benefit from publicly filed registration statements and mandatory periodic reporting. However, it is important to note that today’s action does not constitute approval of the disclosed ETP arrangements, such as custody arrangements.
Second, these products will be listed and traded on registered national securities exchanges. Such regulated exchanges must have rules designed to prevent fraud and manipulation, and we will closely monitor them to ensure enforcement. Additionally, the Commission will fully investigate any fraudulent or manipulative conduct in the securities markets, including manipulation schemes using social media platforms. These regulated exchanges also have rules aimed at addressing certain conflicts of interest and protecting investors and the public interest.
In addition, existing rules and codes of conduct will apply to the purchase and sale of the approved ETPs. For example, when broker-dealers recommend ETPs to retail investors, Regulation Best Interest will apply; investment advisers have fiduciary duties under the Investment Advisers Act. Today’s action does not approve or endorse crypto trading platforms or intermediaries, which largely operate in violation of federal securities laws and frequently involve conflicts of interest.
Third, Commission staff are simultaneously completing reviews of registration statements for 10 spot Bitcoin ETPs, which will help create a level playing field for issuers and benefit investors and the broader market.
Since 2004, the agency has had experience regulating ETPs based on certain non-security commodities like precious metals. This experience will be highly valuable in overseeing the trading of spot Bitcoin ETPs.
While we remain neutral, I must point out that the underlying assets of precious metal ETPs have commercial and industrial uses, whereas Bitcoin is primarily a speculative and highly volatile asset, also used in illegal activities such as ransomware, money laundering, sanctions evasion, and terrorist financing.
Although we are approving the listing and trading of certain spot Bitcoin ETP shares today, we are neither approving nor endorsing Bitcoin. Investors should remain cautious about the numerous risks associated with Bitcoin and crypto-linked products.
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