Bloomberg ETF analysts have raised the possibility that Gary Gensler, the Chair of the United States Securities and Exchange Commission (SEC), may employ a surprising tactic regarding spot Bitcoin exchange-traded funds (ETFs). In a tweet on October 31, ETF commentator Dave Nadig questioned whether Gensler might be allowing spot Bitcoin ETF applications to accumulate with the intention of rejecting them all at once, describing it as a “semi-comedic rug-pull.”
“I’m sure it will be much more boring than this — but sometimes it does feel like this is all a setup for a giant Gensler semi-comedic rug-pull,” stated Nadig. In response to this speculation, senior Bloomberg ETF analysts James Seyffart and Eric Balchunas acknowledged that the idea had crossed their minds for some time. Balchunas characterized the notion as “amazingly sadistic” and suggested that it could potentially result in a wave of lawsuits.
While both analysts considered such a scenario unlikely, Balchunas admitted that a last-minute denial was still a possibility, which was a contributing factor to their reluctance to raise the odds of approval for spot Bitcoin ETFs to anything above 90%.
Gary Gensler’s stance on spot Bitcoin ETFs has recently gained attention, particularly in light of a 2019 video in which he characterized the SEC’s position on such products as “inconsistent.”
The SEC has a history of denying spot Bitcoin ETF applications dating back to 2017, a trend that has continued during Gensler’s tenure as SEC Chair since 2021. Gensler’s SEC has either delayed, denied, or pushed back all spot Bitcoin ETF applications, citing concerns about investor protection.
In June 2022, crypto asset manager Grayscale sued the Gensler-led SEC for rejecting its proposal to convert its existing Bitcoin trust into a spot ETF. The court ruled that the SEC’s rejection was “arbitrary and capricious.” However, the SEC did not appeal this decision.
To date, the SEC has only approved ETF applications for Bitcoin and Ether futures products, asserting that spot products lack sufficient safeguards to protect investors from market manipulation.
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