The WSJ editorial board called out Gensler’s two-pronged approach, which makes it difficult to approve a spot Bitcoin product.
The Wall Street Journal Editorial Board has blasted Gary Gensler’s “legendary” opposition to the approval of a spot Bitcoin ETF (ETF).
The incisive opinion piece, which was published on July 6th, called out the Gensler-led Securities and Exchange Commission (SEC) for blatant discrepancies in how the commission treats requests for exchange-traded products (ETPs) related to Bitcoin as opposed to more conventional assets and other commodities.
Every proposal for a spot Bitcoin ETP has thus far been denied by Gensler’s SEC, including two that came in the past week from Grayscale and Bitwise. As a result, Grayscale has filed a lawsuit against the SEC.
Since the commission has previously approved multiple ETPs for Bitcoin futures, which have significantly higher fees and more risk for investors than the proposed spot ETPs, Gensler’s opposition to spot crypto ETPs has become “legendary,” according to SEC Commissioner Hester Peirce.
Peirce also questioned why ETPs haven’t received US approval although the products have in other countries.
“At what point, if any, does the increasing maturity of the Bitcoin spot markets and the success of similar products elsewhere tip the scale in favor of approval?”
Additionally, WSJ editorial board has called attention to Gensler’s two-pronged strategy, which makes it nearly impossible to get a spot Bitcoin product approved.
For example, ETP sponsors may be required to show that a sizable portion of Bitcoin trading takes place on a regulated exchange, or the underlying market may need to “possess a particular resistance to manipulation beyond the protections…of traditional markets.”
Gensler is “well aware,” according to WSJ editorial, that the first criterion simply cannot be satisfied because practically all Bitcoin trading now takes place on unregulated cryptocurrency exchanges.
The SEC has “arbitrarily imposed” a higher standard for spot Bitcoin ETPs without “explaining how to satisfy it,” making it more challenging for sponsors to meet the second criterion.
Senior ETF analyst at Bloomberg, Eric Balchunas, tweeted to his 107,000 followers that it was “great to see” the WSJ support his colleague James Seyffart’s assertion that Gensler is “holding innovation hostage” in order to dominate the cryptocurrency industry.
The article was published a week after Grayscale filed a lawsuit against the SEC after it rejected its request to launch a spot Bitcoin ETF. Grayscale claimed that the SEC’s inconsistent rules regarding spot and futures Bitcoin ETPs violate the law’s requirement that regulators give “consistent treatment to similar investment vehicles.”
