Lawmakers Pen Letter to Gensler as SEC Delays ETF Application Amid Looming U.S. Shutdown

While the United States Government is heading towards a shutdown, the United States Securities and Exchange Commission (SEC) continues its tough stance on crypto. Although the U.S. Senate has taken steps to secure funding beyond September, House Republicans show little sign of amenability so far.

Earlier SEC Delays for ARK Than Anticipated

Amid these capricious times, the SEC has just delayed yet another Spot Bitcoin ETF application. This time Cathie Woods Ark Invest application was delayed, and remarkably early too.

ETF Research Analyst for Bloomberg Intelligence, James Seyffart, pointed out that a decision wasn’t expected until November 11, which may be a bad sign for other Spot Bitcoin ETF applications.

UPDATE: Wow. The SEC just came out SUPER early and delayed the @ARKInvest / @21Shares #Bitcoin ETF filing. This thing wasn't due for a decision until Nov 11.

Also delaying the @GlobalXETFs application which was due Oct 7. pic.twitter.com/7DiBq1h4Ef

— James Seyffart (@JSeyff) September 26, 2023

There is a possibility that the SEC is proactively adjusting its schedule to anticipate potential delays if a shutdown occurs. SEC Chair Gary Gensler has indicated that in such a scenario, SEC oversight would be significantly limited.

Gensler said, “The public should understand, we will largely be a skeletal staff under the laws, and so the normal oversight we have on markets will not be possible. […] Companies that want to go public may not find that their filings could even be reviewed by the SEC during a shutdown.”

A Letter to Gensler

On Tuesday local time, four Republican party members including Tom Emmer and Richie Torres sent a letter to Gensler asking the SEC to approve a Spot Bitcoin ETF. The letter used assertive language and said it wanted to “ensure the SEC does not continue to discriminate against spot bitcoin exchange traded products.”

🚨NEW: A bipartisan letter sent to @GaryGensler by GOP members @GOPMajorityWhip and @USRepMikeFlood, and Democrats @RitchieTorres and @RepWileyNickel urging the @SECGov to approve a $BTC Spot ETF. 👇🏼 pic.twitter.com/7ygTYWIPyu

— Eleanor Terrett (@EleanorTerrett) September 26, 2023

It is noteworthy that in Grayscale vs. SEC, three judges had upheld that the “SEC violated the Administrative Procedures Act” by denying Grayscale’s ETF application.

The letter also cited the judge’s criticism of the SEC’s approach, noting that “unexplained discounting of the obvious financial and mathematical relationship between the spot and futures markets falls short of the standard for reasoned decision making.”

In its judgement, the court had called the SEC’s regulatory behaviour unlawful unless the agency provides a more “coherent explanation.”

Gensler Scheduled for Oversight Hearing

The SEC chair is scheduled to appear for an oversight hearing of his agency with the U.S. House Committee on Financial Services on Wednesday at 10am U.S. Eastern Standard Time. The discussion is expected to cover topics ranging from the agency’s dealing with oversight requests and digital asset regulation to the possible implications of a government shutdown.

Meanwhile, Gensler repeats what has become his routine statement when it comes to crypto. In a prepared statement he said, “Given this industry’s wide-ranging noncompliance with the securities laws, it’s not surprising that we’ve seen many problems in these markets,” Gensler added, “We’ve seen this story before. It’s reminiscent of what we had in the 1920s before the federal securities laws were put in place.”