Lawmakers urge SEC Chair Gensler to allow spot bitcoin ETFs 'immediately'

Quick Take

  • Lawmakers urged SEC Chair Gary Gensler to “approve the listing of spot-bitcoin ETPs immediately,.”
  • In a letter sent to the chair, they cited the Grayscale decision as a reason to begin greenlighting those types of products. 

A group of Republican and Democratic lawmakers pressed Securities and Exchange Commission Chair Gary Gensler to urgently allow the listing of a spot bitcoin exchange-traded fund following a significant court ruling.  

Reps. Mike Flood, R-Neb., Tom Emmer, R-Minn., Ritchie Torres, D-N.Y. and Wiley Nickel, D-N.C., urged Gensler to allow those listings, arguing a regulated spot bitcoin ETF would increase investor protection by making access to bitcoin more transparent and safer, according to a letter sent Tuesday. 

"Congress has a duty to ensure the SEC approves investment products that meet the requirements set out by Congress," they said. "To that end, we urge you to approve the listing of spot-bitcoin ETPs immediately."

Last month, Grayscale Investments secured a win when three judges in the U.S. Court of Appeals for the D.C. Circuit ruled that the SEC had to re-review its bid for a spot bitcoin ETF. This came after Grayscale sued the agency last year after its proposal for spot bitcoin ETF was rejected.

Differential treatment

The court specifically addressed the SEC's differential treatment of spot bitcoin ETFs and similar funds based on futures contracts, which the regulator has approved. 

"The Court’s finding underscores the fundamental point," the lawmakers said. "A spot bitcoin ETP is indistinguishable from a bitcoin futures ETP. Thus, the SEC’s current posture is untenable moving forward."

Gensler will respond to members of Congress directly, not through the media, an SEC spokesperson said. 

The SEC has not yet greenlit a spot bitcoin ETF, although big name players including BlackRock and Fidelity have submitted applications for funds over the past several months. 

SEC's scutiny of Chinese crypto companies 


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Separately on Tuesday, Rep. Blaine Luetkemeyer, R-Mo., sent a letter to Gensler and Financial Industry Regulatory Authority President Robert Cook over concerns that both agencies allow registered broker-dealers with ownership ties to the Chinese Community Party to operate in the U.S. 

Luetkemeyer argued guidance was too narrow and insufficient to address concerns regarding non-China based U.S. firms with ties to the CCP, citing broker-dealers, including Prometheum Inc, Webull Financial, LLC and Moomoo, Inc. 

"The SEC's limited effort in this regard is particularly troubling given the important role registered broker-dealers play in our financial markets, including the fact that many of these firms provide (or intend to provide) products and services directly to retail investors, which requires the collection of substantial amounts of customers' personal information," the lawmaker said. 

Luetkemeyer posed questions asking Gensler about the agency's data security concerns on ties to the CCP, among others. The deadline for Cook and Gensler to respond is Oct. 26. 

The SEC, Moomoo and Webull did not immediately respond to a request for comment. 

FINRA said it planned to respond to the letter. Prometheum declined to comment on this specific letter. In the past, the firm's Co-Chief Executive Officer Aaron Kaplan has said concerns over Prometheum's ties to China were "unfounded and without merit." 

Luetkemeyer sits on the House Financial Services Committee, which will hear from Gensler on Wednesday. 

Updated at 6:45 p.m. to add letter from Luetkemeyer and a response from the SEC

Updated at 9:20 a.m. with comments about FINRA and Prometheum 

© 2023 The Block. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.


About Author

Sarah is a reporter at The Block covering policy, regulation and legal happenings. Before, Sarah was a reporter with CQ Legal writing about securities regulation, which is where she first started reporting on crypto. Sarah has also written for The Bond Buyer and American Banker, among other finance-related publications. She graduated from the University of Missouri and earned a degree in print and digital journalism. Sarah is based in Washington D.C., and is an avid coffee lover. You can follow her on Twitter @ForTheWynn.


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