In a commentary, the Wall Street Journal strongly criticizes the actions of SEC chief Gary Gensler, who was recently condemned by Bloomberg as a “hostage taker” of Bitcoin (BTC).
The sharp–tongued opinion article reprimands Gary Gensler – the head of the US Securities and Exchange Commission – for his “legendary” stubbornness in rejecting a first “direct” Bitcoin ETF for the US market. Above all, the argumentation and its inconsistency causes a frown at the Wall Street Journal, because in similar cases, such index funds for other investment products are often waved through without further ado.
Accordingly, the crypto industry has been biting its teeth at the head of the SEC so far with regard to the introduction of a direct ETF. Thus, even the relevant applications from large investment firms such as Grayscale and Bitwise were consistently rejected. For this reason, Grayscale has now even taken legal action against the Securities and Exchange Commission.
What causes even more “astonishment” at the WSJ in this context is the fact that the authority has already approved index funds (ETFs) based on Bitcoin futures last year.
To explain: While the futures ETFs only indirectly track the price development of BTC, the Bitcoin price would literally be directly mapped in the direct ETFs. The direct ETFs therefore offer institutional investors in particular the most direct way possible to invest in the market-leading cryptocurrency without exposing themselves to the risk of a direct investment.
Meanwhile, the constant rejections of her supervisor have led even SEC Commissioner Hester Peirce to describe Gensler’s attitude as downright “legendary”. That’s why she asks:
“At what point do the market maturity of Bitcoin and the success of similar investment products in other countries weigh [zum Beispiel in Kanada und Europa wurden direkte Bitcoin-ETFs bereits zugelassen] heavy enough to have the scales tipped in the direction of approval?“
Furthermore, the Wall Street Journal emphasizes that Gensler has built a kind of argumentative “double bottom”, which makes admission almost impossible according to the logic of the SEC.
For example, the requesting ETF issuers must prove on the one hand that a significant part of Bitcoin trading takes place on regulated markets and on the other hand, these markets must also be “resistant to market manipulation beyond the applicable regulations for classic financial markets”.
The WSJ commentators reply that Gensler is “fully aware” that the first criterion simply cannot be met, since a large part of Bitcoin trading takes place on unregulated crypto exchanges.
The second criterion is also difficult for the applicants to meet, because the SEC has set a “completely arbitrary” standard for Bitcoin ETFs in this regard, without explaining “how this can be met”.
Eric Balchunas, chief analyst of Bloomberg, in view of the article, is pleased that the Wall Street Journal takes up the recent thoughts of his colleague James Seyffart, who had previously called Gensler a “hostage taker” of Bitcoin because of this regulatory approach.
Nice to see the @WSJ editorial board today echo @JSeyff’s note from April that Gensler is holding spot bitcoin ETFs (and innovation) hostage so he can get control of crypto market h/t @ToddRosenbluth pic.twitter.com/wUEr7AdnpU
– Eric Balchunas (@EricBalchunas) July 7, 2022
