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Gensler Dodges Crypto Questions After Treasury Market Meeting

Ruholamin Haqshanas
Last updated: | 2 min read
Image Source: CNBC

Securities and Exchange Commission (SEC) Chair Gary Gensler appeared reluctant to discuss cryptocurrency during a meeting focused on the U.S. Treasury market, evading a reporter’s question regarding the status of spot bitcoin ETF applications. 

Gensler’s response came during an interview on Bloomberg Television, where he emphasized the significance of the $26 trillion Treasury market and downplayed the relative importance of crypto securities.

“The U.S. Treasury market is a very consequential, very important market. Crypto securities are not only much smaller, it’s not how we fund our government. It’s not how we conduct monetary policy,” Gensler stated in response to the reporter’s query about spot funds. 

He further highlighted the potential harm faced by investors in the crypto market due to non-compliance with securities laws and other regulations.

Currently, the SEC is reviewing more than a dozen applications from prominent asset management firms, including BlackRock and Fidelity, for the launch of the first spot bitcoin fund in the country. 

Speculation around an imminent decision has contributed to the recent surge in the price of bitcoin, the world’s largest cryptocurrency by market capitalization.

Bitcoin constitutes approximately $838 billion of the total crypto market capitalization, which stands at nearly $1.7 trillion. 

On Wednesday, its price rose by 4.1%, reaching $42,802 at 2:45 p.m. ET.

Gensler Avoids Questions About Spot Bitcoin ETFs

When questioned about the ongoing review process for spot bitcoin funds last month, Gensler refrained from providing specific details, stating that he did not wish to prejudge the matter. 

He has previously described the SEC’s review process as “time-tested.”

In recent weeks, the SEC has been engaging in discussions with potential issuers, focusing on technical aspects related to proposed redemption processes. 

Among the companies involved, BlackRock stands out as it met with federal regulators for the third time in as many weeks on December 12.

Grayscale, Franklin, and Fidelity also had meetings with the SEC last week, indicating the growing interest and efforts surrounding Bitcoin ETF applications.

BlackRock recently made amendments to its spot Bitcoin ETF application, aiming to facilitate participation from large banks. 

The updated application introduced new shares in the fund that can be purchased with cash, expanding the options beyond solely using cryptocurrencies.

The SEC is expected to make a decision on BlackRock’s application by January 15, with the final deadline set for March 15. 

The SEC has historically denied or delayed spotcoin ETFs due to concerns over market manipulation and investor protection. 

However, following a landmark lawsuit loss to Grayscale Investments in August, the agency began collaborating more closely with a dozen firms to explore the possibility of bringing such funds to the market. 

Many industry participants, including Cathie Wood of ARK Invest, believe that the SEC will approve multiple applications simultaneously to prevent any single firm from gaining a first-mover advantage.