The Securities and Exchange Commission approved 11 applications this week to create spot Bitcoin ETFs, but notable crypto skeptic Gary Gensler, the agency’s chairman, is not necessarily thrilled about it.
Despite being the deciding vote in a 3-2 result to approve the nearly dozen applications, Gensler, in an interview with CNBC on Friday, said investors needed to remain cautious.
He pointed out that Bitcoin, which investors can now directly put money into through the new ETFs, is “highly volatile” and that crypto’s OG has been tied to things like money laundering and ransomware.
Gensler COPING AND SEETHING
— Cryptik1.eth |🛸 (@Cryptik1E) January 12, 2024
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“Bitcoin, itself, we did not approve, we did not endorse,” he said.
Gensler did admit that Bitcoin is being used as a store of value but less so as everyday currency.
“The only payment mechanism it’s being used for in sort of a, in a primary sense, is illicit activity,” he said in the interview.
The SEC chairman went on to emphasize, as he did in a statement following the approval Wednesday, that letting the Bitcoin ETFs trade in the public markets was “the most sustainable path forward” in the wake of the Grayscale decision in August.
As part of the decision, an appeals court judge called the SEC “arbitrary and capricious” for denying Grayscale the ability to convert its Grayscale Bitcoin Trust into a spot Bitcoin ETF. In October, the agency decided not to appeal the ruling, paving the way for approval.
Gensler admitted in his initial statement that the court ruling played a role in the decision, and repeated as much in the CNBC interview.
Crypto advocates such as MicroStrategy founder Michael Saylor joined a handful of TradFi stalwarts like BlackRock’s Larry Fink in cheering the approval of spot Bitcoin ETFs, although others figures were fiercely critical.
Vocal crypto skeptic Sen. Elizabeth Warren (D-Mass.) said in a post on X that the SEC was flat out “wrong.”
The @SECgov is wrong on the law and wrong on the policy with respect to the Bitcoin ETF decision.
— Elizabeth Warren (@SenWarren) January 11, 2024
If the SEC is going to let crypto burrow even deeper into our financial system, then it's more urgent than ever that crypto follow basic anti-money laundering rules.
Despite the criticism, Gensler told CNBC that he stood by the decision, although he understood why some people opposed it.
“I have deep respect for those who may have been on the other side of this,” he said. “But, again, I have a deep respect for the law and how courts interpret the law.”