Ten years after the submission of the first request for a spot Bitcoin ETF, the U.S. Securities and Exchange Commission (SEC) finally approved the listing and trading of the 11 pending applications today. This was announced by Gary Gensler, the SEC’s chairman. In the statement, Gensler does not use the term “ETF” but rather “ETP,” which is the generic term that encompasses ETFs. The SEC made the announcement yesterday on its X social media account, but minutes later, Gensler claimed the account had been hacked and stated on his X account that the information was false.
However, Coinbase, which posted the image below, did not remove the post at any time. The U.S. exchange is one of the main guarantors and custodians of most of the Bitcoin ETFs approved by the SEC today. In other words, the majority of Bitcoin ETFs will be launched using Coinbase’s cryptocurrency custody services, making it a significant business for the exchange.
In his remarks, Gensler emphasizes that despite approving the listing and trading of certain Bitcoin ETP shares, “we do not approve or endorse bitcoin.” The SEC chairman asserts that investors should be cautious due to the numerous risks associated with bitcoin and products whose value is linked to cryptocurrencies.
Gensler notes that since 2018, under the presidency of Jay Clayton until March 2023, the SEC disapproved more than 20 rule change filings for spot Bitcoin ETPs. At this point, he mentions the filing made by Grayscale, which considered converting Grayscale Bitcoin Trust into an ETP.
The SEC chairman states that although we now face a set of filings similar to those rejected in the past, circumstances have changed. The U.S. Court of Appeals for the District of Columbia Circuit held that the Commission did not adequately explain its reasoning when disapproving the listing and trading of the proposed ETP by Grayscale (the Grayscale Order). Therefore, the court overturned the order and returned the matter to the Commission. Based on these circumstances and those discussed more thoroughly in the approval order, I believe the most sustainable path forward is to approve the listing and trading of these spot Bitcoin ETP shares.
Gensler emphasizes that it is important to note that today’s action is limited to ETPs holding a non-valued product: bitcoin. It does not, in any way, indicate the willingness to approve listing standards for cryptocurrency securities. The approval, says Gensler, also does not indicate anything about the Commission’s views on the status of other cryptocurrencies under federal securities laws or the current compliance status of certain participants in the cryptocurrency market with federal securities laws.
In this regard, the SEC’s head says that, without prejudging any cryptocurrency, the vast majority are investment contracts and, therefore, subject to federal securities laws. Gensler believes that the approval provides certain protections for investors. For example, sponsors of Bitcoin ETPs must provide full, fair, and accurate disclosure about the products.
Secondly, Gensler notes that these products will be listed and traded on registered national stock exchanges. “These regulated exchanges must have rules designed to prevent fraud and manipulation, and we will closely monitor them to ensure they enforce those rules. Additionally, the Commission will thoroughly investigate any fraud or manipulation in the securities markets, including systems using social media platforms.”
Thirdly, Gensler says the Commission’s staff is separately completing the review of the registration statements for 10 spot Bitcoin ETPs simultaneously, which will help create a level playing field for issuers and promote fairness and competition, benefiting investors and the overall market.