Bitcoin Futures exchange-traded funds (ETFs) have started trading, but there is no hope for a physical Bitcoin ETF yet, and if there have been, they are dashed by the US Securities and Exchange Commission (SEC) Chairman Gary Gensler.
Speaking at Yahoo Finance’s All Markets Summit Monday, Gensler reiterated his concerns about investor protection in the $2.75 trillion crypto market.
“Investors aren’t protected the way they are, whether they go into the stock or bonds markets that we’ve overseen so long.”
“Without that, I think it really is, as I’ve said to others, a bit of the Wild West.”
Last week, the first ETF linked to Bitcoin futures contracts was approved in the US, whose debut was the second-largest ever for an ETF and the fastest ever to amass $1 billion in assets.
On the back of the ETF, the price of Bitcoin made a new all-time high at $67,000, on which optimism started to build over the prospect of giving a Bitcoin spot ETF the green light as well.
But Gensler noted that bitcoin futures are regulated by the Commodity Futures Trading Commission (CFTC).
“It’s a matter of bringing as much of this space within the investor protection remit.”
Waiting to continue
A few days after the ProShares (BITO) debut, Valkyrie also launched its own Bitcoin Strategy ETF (BTF) with Valkyrie CEO Leah Wald saying that with regulators giving a thumbs up to bitcoin futures ETFs, she believed that “demand is strong enough to bring two or three Bitcoin futures ETFs” to the market.
During this time, Grayscale Investments also submitted a filing to convert its largest Bitcoin Trust (GBTC) to a bitcoin spot ETF fueling hope that the regulator may soon open to spot offerings.
$GBTC quietly from -20% to -12% discount also 👀 https://t.co/8dlpKyiq5P
— Zhu Su 🔺 (@zhusu) October 25, 2021
But Gensler didn’t offer any thoughts on if SEC has changed its attitude towards a spot product after the hot debut of futures products.
“These markets, largely around the world, 24 hours a day, 7 days a week, don’t have the similar protections against fraud and manipulation and front running and other abuses.”
“Most of it has not come within an investor protection remit.”
According to Nate Geraci, president of The ETF Store, Gensler’s comments show the SEC is still a ways away from approving such an offering.
“The SEC doesn’t believe they can properly surveil crypto exchanges and combat potential fraud and manipulation.”
“While the futures-based bitcoin ETFs are a positive first step, it appears that investors might be waiting awhile on a spot product.”