Gary Gensler Says ETF Approval ‘Not an Endorsement of Bitcoin’

By Jody McDonald January 11, 2024 In Bitcoin, ETF, SEC
Gary Gensler. Image: Shutterstock.
  • SEC Chair, Gensler was quick to point out spot Bitcoin ETF approvals are not an endorsement of Bitcoin or crypto generally, labels Bitcoin “speculative, volatile asset”.
  • Gensler says approvals don’t imply that ETFs based on “crypto asset securities” would be approved, causing people to question the meaning of the term.
  • Fellow SEC Commissioner Hester Peirce criticises the regulator’s “arbitrary and capricious treatment” of crypto.

It’s happened! After almost a decade of rejected applications, spot Bitcoin ETFs have finally been approved in the US — much to the relief of degens, moonbois and investors everywhere. Amid the wave of celebrations however, one man was keen to remind investors that crypto is still mercurial and risky — that man is SEC Chair, Gary Gensler.

In a statement following the ETF approvals, Gensler emphasised the decisions are not an endorsement of Bitcoin as an asset, taking the opportunity to share his view that Bitcoin is merely a speculative asset lacking real world use-cases and highlighting its alleged widespread use funding terrorist and organised crime organisations.

ETFs Reluctantly Approved, Crypto Attacked 

In his statement Gensler indicated that, from his perspective, the Bitcoin ETFs had been approved reluctantly. The SEC Chair suggested the regulator’s hand had effectively been forced by the U.S. Court of Appeals for the District of Columbia’s decision to vacate a ruling relating to Grayscale’s application to have their Bitcoin trust product converted to an ETF:

The U.S. Court of Appeals for the District of Columbia held that the Commission failed to adequately explain its reasoning in disapproving the listing and trading of Grayscale’s proposed ETP (the Grayscale Order).The court therefore vacated the Grayscale Order and remanded the matter to the Commission. Based on these circumstances and those discussed more fully in the approval order, I feel the most sustainable path forward is to approve the listing and trading of these spot bitcoin ETP shares.

Gary Gensler, Chair of the SEC

Towards the end of his statement Gensler turned his attention to the merits of Bitcoin as an asset, comparing it unfavourably to other non-security assets such as precious metals:


I’d note that the underlying assets in the metals ETPs (exchange traded products) have consumer and industrial uses, while in contrast bitcoin is primarily a speculative, volatile asset that’s also used for illicit activity including ransomware, money laundering, sanction evasion, and terrorist financing.

Gary Gensler, Chair of the SEC

Gensler also emphasised that the decision to approve the ETFs should not be interpreted as an endorsement of Bitcoin or crypto generally:

While we approved the listing and trading of certain spot bitcoin ETP shares today, we did not approve or endorse bitcoin. Investors should remain cautious about the myriad risks associated with bitcoin and products whose value is tied to crypto.

Gary Gensler, Chair of the SEC

Crypto Asset Securities? Gensler Gets Creative

In his statement Gensler used the curious, and possibly newly-invented term “crypto asset securities” — saying the Bitcoin ETF approvals have no implications for the legal status of these assets or the prospects of future ETFs:

It should in no way signal the Commission’s willingness to approve listing standards for crypto asset securities. Nor does the approval signal anything about the Commission’s views as to the status of other crypto assets under the federal securities laws or about the current state of non-compliance of certain crypto asset market participants with the federal securities laws.

Gary Gensler, Chair of the SEC

This apparent neologism didn’t go unnoticed by investors, with many on X looking for clarification on its precise meaning:

Gensler also reiterated his view that virtually all cryptocurrencies are securities and should be regulated under US securities laws: “As I’ve said in the past, and without prejudging any one crypto asset, the vast majority of crypto assets are investment contracts and thus subject to the federal securities laws.”

SEC Commissioner Gives A Different Perspective

An alternative view on the Bitcoin ETFs was provided by Gensler’s fellow SEC Commissioner, Hester Peirce, in her statement following the approvals.

Peirce’s statement is essentially a lengthy criticism of the SEC’s “arbitrary and capricious treatment” of applications for spot Bitcoin ETFs, which she says were subject to conditions and tests that have not been applied to other commodity-based ETF applications:

We squandered a decade of opportunities to do our job. If we had applied the standard we use for other commodity-based ETPs, we could have approved these products years ago, but we refused to do so until a court called our bluff.

Hester Peirce, SEC Commissioner

Peirce was particularly critical of the “correlation test” which is applied only to crypto ETF applications, saying “even now our approval comes only begrudgingly, as demonstrated by our continued insistence that these products satisfy a correlation test we have not demanded of prior commodity-based ETPs.”

Jody McDonald

Jody McDonald

Jody is a Brisbane-based freelance writer who specialises in writing about business, technology, and the future of work.

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