The Chamber of Digital Commerce has criticized the U.S. Securities Exchange Commission for rebuffing a Bitcoin ETF despite numerous applications being made to approve them.
In a Tuesday report, the organization questioned the regulator’s decisions to put on hold or reject over 16 Bitcoin spot ETF applications made since 2013 without a clear explanation.
“Roughly 41 million Americans own cryptocurrency today. However, US retail investors are being denied access to bitcoin exchange-traded funds (ETFs), ” the organisation wrote.
Accordingly, the organisation, which focuses on lobbying for accepting digital assets and blockchain-based technologies, found it irrational for the SEC to purport to be protecting investors, yet an ETF “was a familiar SEC-regulated product.” Further, it blamed the SEC for “imposing regulatory hurdles unique only to bitcoin” under what appears to be a choreographed pattern to overreach its authority on cryptocurrencies.
In rejecting past Bitcoin ETF applications, the SEC has often based its reasons on the premise that there are inadequate market protections against price manipulation for cryptocurrencies. In September 2021, SEC’s chair Gary Gensler stated that the lack of regulatory oversight and surveillance on crypto led to concerns about the potential for fraud and manipulation. At the time, he had hinted at the SEC approving a Bitcoin ETF once Congress brings Bitcoin under US regulatory umbrella.
However, his statements have been termed as contradictory, given that he has often insisted that cryptocurrencies do not need more guidance and that the existing securities laws can be used to police the sector. He has also claimed that Bitcoin is a commodity, not security which means it should be regulated under the CFTC.
“It is becoming clear that the true pretext for blocking bitcoin ETF applications is based not on an unmet legal standard but rather as a means of effectuating a jurisdictional land grab,” the organisation added.
ETF issuers and other participants have challenged the SEC’s pattern of denials terming them as baseless given that there have been no reported instances of hacking, theft or indications of market manipulation related to bitcoin ETFs in other jurisdictions.
In June 2022, Grayscale sued the SEC for rejecting an application to convert its Grayscale Bitcoin Trust (GBTC) into a spot-based Bitcoin (BTC) exchange-traded fund (ETF). Still, despite the rejections, crypto firms including Fidelity, VanEck and Wisdom tree have vowed to keep lobbying until a Bitcoin ETF fund is approved.