The Uncertain Future of a Spot Bitcoin ETF
In a recent interview with Bloomberg TV, former attorney for the U.S. Securities and Exchange Commission (SEC), Tom Gorman, discussed the uncertain future of a spot Bitcoin ETF receiving SEC approval. Gorman, who is now a legal expert specializing in securities law at Dorsey & Whitney LLP, highlighted the cautious approach of the SEC under the leadership of Gary Gensler towards regulating cryptocurrencies like Bitcoin.
The Extensive Experience of Thomas Gorman
Gorman’s career spans over four decades, including his time as Senior Counsel in the Division of Enforcement at the SEC. He has defended SEC investigations, enforcement actions, and white-collar criminal cases in the securities sector. His practice focuses on areas such as insider trading, financial fraud, and the Foreign Corrupt Practices Act (FCPA). Gorman also conducts internal investigations for organizations.
The Challenge of Allowing Cryptocurrencies on Securities Exchanges
Gorman explained that while some cryptocurrencies have been allowed onto commodity exchanges, none have yet been permitted on securities exchanges directly regulated by the SEC. He emphasized that allowing a cryptocurrency onto a securities exchange would require extensive regulatory measures to ensure safety and compliance. According to Gorman, it would be a “very difficult lift.”
Safety and Security Concerns Surrounding Bitcoin
Gorman addressed safety and security concerns related to Bitcoin and other cryptocurrencies. He acknowledged that wrapping Bitcoin in an ETF structure might offer additional safety but noted that the core issues related to its original intent—to operate outside regulatory oversight—still pose significant challenges. Gorman mentioned how entities like Hamas are using cryptocurrencies to finance their operations, raising ethical and security concerns.
Lawmakers’ Concerns About Cryptocurrencies
Gorman commented on the recent letter from over a hundred lawmakers to the Treasury and the National Security Council, highlighting the national security threat posed by cryptocurrencies. He agreed that cryptocurrencies are being used for illicit activities and argued that lax regulation on commodity exchanges makes it easier for entities like Hamas to raise funds compared to securities exchanges with stricter oversight.
Bitcoin’s Regulatory Landscape According to Jay Clayton
In another interview on CNBC’s ‘Squawk Box,’ former SEC Chairman Jay Clayton discussed Bitcoin’s regulatory landscape. He confirmed that Bitcoin has been officially categorized as a commodity by both the CFTC and the SEC, which has legal implications and sets the stage for future regulatory actions. Clayton expressed optimism about the approval of a spot Bitcoin ETF in the United States, citing improvements in market surveillance mechanisms and the resolution of key legal questions surrounding Bitcoin.
Hot Take: The Future of a Spot Bitcoin ETF
While Tom Gorman believes that allowing a spot Bitcoin ETF on securities exchanges would be challenging, Jay Clayton sees an increased likelihood of its approval. Improved market efficiency and the resolution of legal issues are positive indicators for the future of a spot Bitcoin ETF in the U.S. However, concerns about safety, security, and illicit activities associated with cryptocurrencies remain significant obstacles that need to be addressed.
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