Why Did Gary Gensler Approve Spot Bitcoin ETFs?
Securities and Exchange Commission Chair Gary Gensler, who has long been skeptical of cryptocurrency, recently cast the deciding vote to approve several spot bitcoin exchange-traded funds (ETFs). This move grants bitcoin a level of legitimacy on Wall Street that Gensler had previously opposed. So what caused this sudden change of heart?
Trading Volume Surges for Approved Bitcoin ETFs
Despite warnings about bitcoin’s volatility and use in illicit transactions, trading in the newly approved ETFs has skyrocketed. In just the first two days after their launch, trading volume surpassed $5 billion, indicating significant demand from investors.
Gensler Remains Skeptical
However, Gensler’s skepticism towards bitcoin remains unchanged. In an interview with CNBC after the vote, he referred to bitcoin as a “highly speculative, volatile asset” primarily used by criminals. His negative stance suggests that external factors like political pressure or a court decision may have influenced his decision.
The Grayscale Court Decision
A key factor that played a role in the SEC’s approval of the Bitcoin ETFs was a court decision involving Grayscale. After the SEC rejected Grayscale’s spot bitcoin ETF application in June 2023, the company filed a lawsuit against the agency. When a federal judge ruled that the SEC must justify its treatment of bitcoin spot and futures ETFs more thoroughly, Grayscale gained an advantage. Gensler admitted that this court decision influenced the approval process.
The Legacy of “Crypto Cop” Gensler
Gensler’s reputation as a “crypto cop” is now in question following his vote to approve spot Bitcoin ETFs. President Biden appointed him as SEC Chair to bring order to the world of digital assets. However, by succumbing to court pressure, Gensler’s legacy has suffered a blow.
Hot Take: The Future of Crypto
The successful launch and high trading volume of the approved Bitcoin ETFs demonstrate that both institutional and retail investors recognize the value of cryptocurrency technology. Despite concerns about manipulation and volatility, blockchain-based digital assets are here to stay. Regulators should adopt a nuanced approach to crypto regulation rather than resorting to scaremongering and obstructionism. Instead of stifling innovation, policymakers should promote freedom while implementing sensible safeguards against fraud. The SEC should shift its focus from attacking crypto businesses to fostering communication and collaboration with them. The crypto revolution is unstoppable, and the world has already voted for a decentralized economic future.
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