Bitcoin ETF approved
The drama is over.
Bitcoin spot market exchange traded funds (ETFs) now exist so that if investors want to easily invest in Bitcoin through their favorite 401k or brokerage account, they can. Securities and Exchange Commission (SEC) Chair Gary Gensler (D) made the announcement shortly after the stock market closed saying grudgingly in a lengthy statement, “I feel the most sustainable path forward is to approve the listing and trading of these spot bitcoin ETP shares.” Read it.
The Commission’s vote on the ETF applications was 3-2 with Chair Gensler voting with the two Republican commissioners. See the “Jan. 10” vote here.
what you should know: If you will miss this storyline, the drama will continue when other digital assets such as Ether or XRP and their ETFs come up for review by the Commission.
Bitcoin ETF approved – reaction
Shortly after Gensler, Republican SEC Commissioner Hester Peirce expressed a sigh of relief in a statement of her own: “Today marks the end of an unnecessary, but consequential, saga. More than ten years after the filing of the first spot bitcoin exchange-traded product (‘ETP’) application, the Commission finally has approved multiple applications by exchanges to allow the listing and trading of spot bitcoin ETPs. This saga likely would have spanned well beyond a decade were it not for the DC Circuit-ex-machina.[link] You need not be a seasoned securities lawyer to spot the difference in treatment of bitcoin-related ETP applications compared to the many other ETP applications that have been routinely filed and approved over the past decade.” Read more.
Senator Cynthia Lummis (R, WY) said in a statement, “The SEC’s decision to comply with the Grayscale court ruling and approve the pending Bitcoin spot ETFs to be listed on registered national securities exchanges is a historic decision for the crypto asset community. It will provide millions of Americans with easier access to crypto assets and allow them to benefit from professional managers and more competitive fees.”
House Financial Services Committee Chair Patrick McHenry (R, NC) and French Hill (R, AR), Chairman of the HFS Digital Assets, Financial Technology and Inclusion Subcommittee said in a statement, “While legislation to provide clarity and certainty for digital assets remains necessary, the steps taken today are a significant improvement over the SEC’s track record of regulation by enforcement. We are pleased that investors and our markets will finally be afforded greater access to this generational technology. We remain committed to enhancing consumer protection in the digital asset markets through comprehensive market structure and payment stablecoin legislation.”
Rep. Wiley Nickel (D, NC) said in a statement, “While I’m pleased with Chairman Gensler’s decision, it’s clear that his regulation by enforcement battle is losing in the courts and in public opinion. Congress has a role to play in pushing back against the SEC’s untenable approach on digital assets.”
Rep. Mike Flood (R, NE) said, “As I stated in my September letter to the SEC, the DC Court of Appeals spoke with clarity on this issue: the SEC’s initial denial of Grayscale’s application was ‘unlawful.’ I am glad that in the end common-sense and the rule of law won out, and retail investors across the country will get greater choice as a result.”
Rep. John Rose (R, TN) said, “It is clear that the American people have a desire to invest in this new technology, and our laws and regulations should reflect and welcome that desire – not shun it like SEC Chair Gary Gensler has done for too long. I look forward to continuing our work on the House Financial Services Committee welcoming similar digital asset innovation, like passing the FIT for 21st Century Act, which will provide much-needed regulatory stability for digital assets.”
Financial Services Committee Republicans Demand Briefing from SEC by January 17 on Compromised X Account, Unauthorized Bitcoin ETF Post – house.gov
CFPB and digital wallets
As the Consumer Financial Protection Bureau (CFPB) looks to include payment apps and crypto (wallets) under rules made for banks, some banking organizations are not in favor of looping crypto (wallets) into the same rule meant for fiat currency. According to Politico, a bipartisan group in House Financial Services is saying not so fast – among them “… [seven] Financial Services Democrats led by Reps. Jim Himes (D, CT) and Josh Gottheimer (D, NJ) say the agency needs to be more specific about each product market it plans to cover and spell out the potential risks.” Read about it.
Paradigm’s Justin Slaughter on digital assets prospects – Politico
what you should know: This group of Democrats sounds like members of the group that splintered off from Democratic leadership for the digital asset market structure markup and stablecoin markup last July.
SRO crypto compliance
In a post titled, “AI and 5 other FINRA worries for 2024,” crypto makes the list of things that The Financial Industry Regulatory Authority (FINRA) sees as a tripwire for members of its self-regulatory organization. Read it.
The insights are gleaned from FINRA’s just-released 2024 Oversight Report which contains a deep-dive on member compliance procedures when engaging with digital assets. For example for crypto asset communications, the organization advises: “If your firm communicates with retail customers concerning crypto assets and crypto asset-related services, do its retail communications to customers contain a fair and balanced presentation of the risks associated with these assets (without unwarranted or misleading content)?” There’s a lot more. Download it (PDF).
Tokenization’s first step into traditional U.S. financial markets appears to be U.S. Treasuries as the new market has grown to “$850 million market from $100 million over the past year, with asset management giant Franklin Templeton being the largest player,” says CoinDesk. UK-based Makor Securities’ digital asset brokerage arms is offering investors the ability to deposit their cash in a U.S. Treasury bill liquidity pool and earn a yield – all of it staged “on the Ethereum network without any additional onboarding.” Read more.
still more tips
HashKey COO: 10 asset managers in Hong Kong are exploring potential spot crypto ETFs – The Block
Apple pulls Binance, Kraken, other crypto apps from India App Store – TechCrunch
Terrorist Financing: Hamas and Cryptocurrency Fundraising (Nov. 27) – Congressional Research Service
Turkey nears completion of comprehensive crypto regulation framework – Crypto News