May 22, 2024
SEC Commissioner Raises Concerns Over Bitcoin ETFs
Bitcoin News

SEC Commissioner Raises Concerns Over Bitcoin ETFs

Following the United States Securities and Exchange Commission’s (SEC) approval of multiple fund managers’ applications to list spot Bitcoin (BTC) exchange-traded funds (ETFs), SEC Commissioner Mark Uyeda expressed “strong concerns” in a published statement. Despite voting in favor of the Bitcoin ETF approvals, Uyeda criticized the underlying analytical approach taken by the commission, expressing worries about the potential precedent it could set for the future.

“The flawed reasoning in the [spot Bitcoin ETF] Approval Order could reverberate for years to come.”

Uyeda emphasized that the SEC missed an opportunity to treat Bitcoin as it would any other commodity, arguing that spot Bitcoin exchange-traded product (ETP) applications should have been approved earlier under a different standard. He contended that the approval order provided no additional explanation for treating spot Bitcoin ETPs differently than Bitcoin futures ETPs under the “significant market” test.

“Rather than requiring applicants to make multiple attempts in the dark in hopes that they might finally present an argument leading to approval under the ‘significant market’ test, the Commission should have actively made its expectations known.”

While none of the BTC ETF applicants met the SEC’s significant market test, the approval cited “other means” that satisfied the requirements. Uyeda claimed that the SEC introduced a new standard after years of applicants pursuing the “significant market” requirement.

Uyeda also suggested that the SEC’s motivation for accelerating spot BTC ETF approvals was to gain a first-mover advantage. He highlighted the lack of analysis on how the cash-only creation and redemption feature could prevent fraud and called for more transparency in the analysis and reasoning of such approval orders.

He finalized by expressing, “Despite my reservations about the legal analysis provided in the order, I endorse the issuance of the Approval Order due to independent reasons, believing that the applications meet the standards specified in the Exchange Act.”

Image by yanalya on Freepik

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