Much media attention has been paid to the recent approval by the United States Securities and Exchange Commission (SEC) to allow the trading and listing of certain of spot bitcoin exchange-traded products (ETPs). The SEC’s hand was forced by the decision of the U.S. Nineth Circuit Court, which ruled last week that the SEC failed to adequately explain its decision in not approving the listing of Grayscale’s proposed ETP (The Grayscale Order).
Faced with the Grayscale Order, SEC Chair Gary Gensler opted to “take the most sustainable path forward” and approved the Grayscale application for the listing of the ETPs.
At the same time the SEC also approved ten additional spot bitcoin ETPs for listing and trading.
Gensler has expressed caution in the SEC decision, restating his reservations with bitcoin, noting it is “primarily a speculative, volatile asset that’s also used for illicit activity including ransomware, money laundering, sanction evasion, and terrorist financing.”
Gensler has also indicated that the approval of the 11 listings does not signal the SEC’s willingness to approve listing standards for crypto asset securities: “Nor does the approval signal,” wrote Gensler, “anything about the Commission’s views as to the status of other crypto assets under the federal securities laws or about the current state of non-compliance of certain crypto asset market participants with the federal securities laws,” signalling a continued hard-line approach towards crypto assets. He warned sponsors of bitcoin ETPs that they would be required to provide “full, fair, and truthful disclosure” about their products. He also indicated the that the SEC will investigate any sign of fraud or manipulation in the markets, especially those using social media platforms.
You can read the complete statement by SEC Chair Gensler here.
For more information, please call Barbara Hendrickson at BAX Securities Law (647) 403-4606.
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