In an article for Forbes, partner Hailey Lennon analyzes the latest development in the battle between various cryptocurrency companies and the U.S. Securities and Exchange Commission (SEC): a push by lawmakers for the SEC to approve spot bitcoin exchange-traded funds (ETF) immediately.
In the Sept. 27 article, Lennon noted that, since 2017, the SEC has become thought of as a hostile regulator of the cryptocurrency industry.
"The SEC has been criticized for regulating through enforcement action, rather than cooperating with the industry to make a clear path forward," Lennon wrote. "Cryptocurrency exchange and spot bitcoin ETF applications have been denied or stuck in a pipeline. Cryptocurrency companies (like Coinbase) have said they've met with the SEC dozens of times with no resolution or clarity. However, more recently the SEC has faced various defeats in court that further demonstrate the need for the SEC to be proactive in regulating the industry."
On Sept. 26, members of the House Financial Services Committee sent a letter to SEC Chair Gary Gensler, urging the SEC to move forward to approve ETF applications because spot bitcoin ETFs are "indistinguishable" from the crypto futures ETFs, which the SEC has already approved.
Gensler appeared in an SEC oversight hearing in that committee the day the article was published, and members had the chance to question him on the topic.
A bitcoin ETF would allow investors a much easier way to put money into the cryptocurrency market, without actually having to custody bitcoin, as ETFs are designed to be simple to trade in and out of through brokerage accounts, Lennon argued. People have shown interest in this product. Companies have applied to offer a spot bitcoin ETF. A court has said the agency's denials of a spot bitcoin ETF was "arbitrary and capricious."
"The SEC continues to have oversight of the nascent cryptocurrency market and it may take Congressional action to resolve," Lennon wrote. "The role of the SEC is to protect investors, facilitate capital formation, and foster fair, orderly and efficient markets. The way they do that is important. The SEC is not a merit based regulator and their role is not to tell the general public how they can invest their money."
Read the full article here.
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