Gary Gensler explains why spot Bitcoin ETF applications were rejected.

The SEC did not come close to approving a spot Bitcoin ETF because the applications failed to meet the Securities Act’s anti-fraud and manipulative-practice standards. This was stated by the agency’s chair, Gary Gensler, in response to a request from Congressman Tom Emmer.

We received a response from SEC Chair Gensler to our 11/3/21 letter regarding BTC spot ETFs. This issue remains a priority for us and we will continue to oversee the SEC in its mission to maintain fair and orderly markets and facilitate capital formation. pic.twitter.com/WbgSDj7o0T

— Tom Emmer (@RepTomEmmer) February 17, 2022

The SEC chair reaffirmed the agency’s stance of neutrality toward technology and pledged that he would “carefully study” the questions raised by Emmer.

In November 2021, Emmer and his colleague Darren Soto sent a letter to Gensler, in which they described the agency’s stance on spot Bitcoin ETFs as “unacceptable.”

Co-founder and CEO of CoinRoutes, Dave Weisberger, called the SEC chair’s response ‘nonsense’. He argued that futures prices [the Commission approved a similar product] and the spot market correlate by 99%, and the latter are ‘extremely transparent’ and can show an aggregated ‘order book’ across all regulated platforms in the US.

2) The spot markets are extremely transparent. IF the SEC wanted to sue wil them for manipulation, the data is readily available. CoinRoutes can, for example, show the full aggregated order book for Bitcoin for all the US regulated exchanges and the SEC could make use of that…

— Dave Weisberger (@daveweisberger1) February 17, 2022

Emmer stressed that, even after the regulator’s latest response, he will continue to ‘oversee the SEC in its mission to maintain fair and orderly markets and to facilitate capital formation’.

In February the agency postponed a decision on Grayscale Investments’ application to launch a spot Bitcoin ETF. The investment firm described the Commission’s actions to approve exchange-traded funds based solely on Bitcoin futures as \”arbitrary and improper\”.

Earlier, the SEC rejected similar applications from Fidelity Investments, WisdomTree and VanEck, and delayed decisions on filings from Bitwise and Valkyrie Investments.

Bloomberg notes that 95% of respondents in comments to the Commission regarding Grayscale’s spot Bitcoin ETF urged its approval.

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