There is speculation among analysts that the United States Securities and Exchange Commission (SEC) chief Gary Gensler could potentially deny all spot Bitcoin exchange-traded fund (ETF) applications in a single move. This theory was raised by Bloomberg ETF commentators in response to a tweet by ETF commentator Dave Nadig.
Nadig suggested that Gensler may be allowing spot Bitcoin ETF applications to accumulate only to reject them all at once, likening it to a “semi-comedic rug-pull.” While the analysts acknowledged that this scenario is unlikely, they also admitted that the idea has lingered in their minds. They described the potential rug pull as “amazingly sadistic” and predicted that it would likely result in a wave of lawsuits.
Although the analysts did not raise the odds of approval above 90%, they did acknowledge that a last-minute denial is still possible. This cautious approach reflects the SEC’s historical tendency to deny spot Bitcoin ETF applications, a trend that dates back to 2017. Gary Gensler has continued this legacy since becoming the head of the SEC in 2021. He has repeatedly delayed and pushed back spot Bitcoin ETF applications, citing concerns about investor protections.
Gensler’s own views on spot Bitcoin ETFs have come under scrutiny, especially after a video from 2019 surfaced in which he described the SEC’s position on spot ETF products as “inconsistent.” This further fueled speculation about his stance on spot Bitcoin ETFs.
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The SEC’s rejection of Grayscale’s bid to convert its existing Bitcoin trust into a spot ETF in June 2022 resulted in a lawsuit. The court ruled that the SEC’s decision was “arbitrary and capricious,” highlighting the regulator’s inconsistency in handling these applications. The SEC chose not to appeal the court’s decision.
To date, the SEC has only approved ETF applications for Bitcoin and Ether futures products. The agency claims that spot products lack sufficient safeguards to protect investors from market manipulation. This rationale has been a barrier to the approval of spot Bitcoin ETFs.
Given this background, the idea of a mass denial of spot Bitcoin ETF applications by Gensler has captured the attention of industry analysts. While it remains speculative, the potential consequences of such a move are significant. Any decision by Gensler on spot Bitcoin ETFs will undoubtedly have a profound impact on the cryptocurrency industry and the perception of Bitcoin as a mainstream investment vehicle.
As the debate surrounding spot Bitcoin ETFs continues, market participants and investors eagerly await the SEC’s decision. The outcome will shape the future of the cryptocurrency market and potentially determine its level of integration with traditional financial markets.
