US SEC shows complications with Bitcoin ETF kinds

Key Takeaways:

• Crypto community confused over the SEC’s position on Bitcoin Futures and Spot Bitcoin ETFs.
• Brian Brooks lashes over their position on spot BTC ETF.

NIGERIA (CoinChapter.com) — U.S. securities regulator, the Security and Exchange Commission (SEC) has continued to spark debate among crypto-goers over its controversial position with Bitcoin Futures ETF and spot Bitcoin ETF in the markets.

To date, the SEC has approved Bitcoin futures ETFs but has denied the same to exchange-traded products that are spot-based, thus continuing to irk many in the community.

The story so far

In August, SEC Chair Gary Gensler signaled support for a Bitcoin ETF, so long as Bitcoin futures backed it on the CME and, ostensibly, not be based on direct holdings of bitcoins.

The chairman noted that the idea would increase investor protections, a fundamental goal of the commission. His comments led to scores of ETF issuers proposing futures-backed products; in October, with no opposing action by the SEC.

After many issuers got approval for the futures-backed ETF, Grayscale filed to convert their flagship Trust to an ETF stating that the move was triggered d by the SEC’s clearance of a Bitcoin Futures ETF.

Grayscale held that the approval indicates the agency’s comfort in Bitcoin as an underlying asset, believing that accepting a futures-backed Bitcoin product opens the door for other products directly backed by Bitcoins.

However, SEC’s disapproval of the hard asset-backed product from VanEck was termed unfair. Grayscale also revolted against moves to convert GBTC to an ETF. The company’s lawyer stated that SEC has no basis for the position that investing in the derivatives market for an asset is acceptable for investors while investing in the asset itself is not.

SEC wrong or right?

SEC rejected VanEck’s hard asset-backed product over manipulation concerns. In its disapproval statement, the commission highlighted that BZX has not met certain requirements, specifically “designed to prevent fraudulent and manipulative acts and practices” and “to protect investors and the public interest.”

However, the commission failed to note that a hard asset-backed product may in some areas more broadly protect investors and be in the public interest when compared, for instance, to a futures-backed ETF or hot holdings at a digital asset marketplace.

SEC held that without meeting the anti-manipulation requirement, the “protect investors” aspect fails by default.

Brian Brooks fires SEC over position on spot Bitcoin ETF

Former chief of the U.S. Office of the Comptroller of the Currency (OCC), Brian Brooks, has lashed out at the SEC for consistently refusing to approve the spot Bitcoin ETF in the U.S. markets.

Brooks spoke on Wednesday when he testified before Congress and answered key questions about the regulatory landscape in the crypto space in the U.S.

He said the actions of the SEC had driven legitimate activities offshore, thereby harming U.S. investors, innovators, and workers.

Brooks, ex-Binance US CEO, also said that America’s best-known investment advisors – Fidelity – had to move to Canada to launch their spot Bitcoin ETF. While other countries like Germany, Brazil, and Singapore are giving the green light to physically-backed crypto ETFs, he questioned why not the U.S.?

The former OCC chief lashed the SEc stating that they have failed to approve products other G20 nations have approved.