SEC Chairman Gensler Reiterates Investor Protection Concerns Amid Bitcoin ETF Optimism

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Strong demand for bitcoin-related investment securities does not appear to shift the position of the United States Securities and Exchange Commission towards other products more directly related to cryptocurrency.

SEC Chairman Gary Gensler said he remains concerned about protecting investors in the $ 2.5 trillion crypto asset market.

“Investors are not protected the way they are, whether they enter the stock or bond markets that we have overseen for so long,” Gensler said at Yahoo Finance’s All Markets summit on Monday. “Without it, I think it’s really, as I’ve told others, a bit of the Wild West.”

Last week, investors were able to invest in the very first exchange-traded fund (ETF) products linked to Bitcoin futures. Investors swarmed with the new offering; the launch of the ProShares Bitcoin Strategy (BITO) ETF was the second largest ever for an ETF.

As bitcoin itself hit record highs, optimism began to settle on the prospects of the SEC going ahead with a bitcoin spot ETF. While a bitcoin futures ETF is pinned to options contracts traded on the Chicago Mercantile Exchange, there is as yet no ETF linked to bitcoin itself (called a “spot” or “physical” ETF).

Gensler made this distinction, noting that bitcoin futures contracts themselves are regulated by the Commodity Futures Trading Commission.

“It’s about bringing as much of that space as part of investor protection,” Gensler told Yahoo Finance.

Investors can wait “a while” for a spot product

The story continues

A few days after ProShares debuted, digital asset manager Valkyrie launched its own Bitcoin Strategy ETF (BTF). Valkyrie CEO Leah Wald told Yahoo Finance that with regulators’ approval of bitcoin futures ETFs, she believes demand is strong enough to bring two or three bitcoin futures products to market.

During the week, Grayscale Investments also filed a case to convert its bitcoin trust (GBTC) into a bitcoin spot ETF. The move fueled hopes that the regulatory path would soon open up to spot offers.

But Nate Geraci, chairman of The ETF Store, said Gensler’s comments show the SEC is still a long way from approving such an offer.

“The SEC doesn’t think it can properly monitor crypto exchanges and tackle potential fraud and manipulation,” Geraci told Yahoo Finance. “Although bitcoin ETFs based on futures contracts are a positive first step, it looks like investors could wait a while on a spot product.”

When asked if the hot debut of futures products had changed the SEC’s attitude towards a spot product, Gensler declined to comment on specific applications.

“These markets, largely around the world, 24/7, do not have the same protections against fraud and manipulation and running and other abuse,” Gensler told About the vast crypto space.

Brian Cheung is a reporter covering Fed, Economics and Banking for Yahoo Finance. You can follow him on Twitter @bcheungz.

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