U.S. Representatives Tom Emmer and Darren Soto called on the Securities and Exchange Commission (SEC) to allow Bitcoin spot exchange-traded funds (ETFs). The two made their appeal in a bipartisan letter sent to the SEC chairman, Gary Gensler, on Wednesday. The SEC has already approved two Bitcoin futures ETFs, however spot ETFs are waiting approval but has yet to approve any Bitcoin spot ETF.
Representative Emmer said:
“The SEC’s approach to cryptocurrency regulation has been unacceptable. While the trading of Bitcoin futures ETFs is a great step forward for the millions of American investors who have been demanding regulatory clarity, it does not make sense that Bitcoin spot ETFs cannot also commence trading.”
Emmer and Soto wrote in the letter:
“We question why, if you are comfortable allowing trading in an ETF based on derivatives contracts, you are not equally or more comfortable allowing trading to commence in ETFs based on spot Bitcoin.”
“Bitcoin spot ETFs are based directly on the asset, which inherently provides more protection for investors,” adding that futures products “are potentially much more volatile than a Bitcoin spot ETF and may impose substantially higher fees on investors.”
Citing the SEC’s previous reasoning for disapproving Bitcoin spot ETFs, Emmer and Soto also said that:
“Since the SEC no longer has concerns with Bitcoin futures ETFs, it presumably has changed its view about the underlying spot Bitcoin market because bitcoin futures are, by definition, a derivative of the underlying Bitcoin spot market.”
“The SEC should no longer have concerns with Bitcoin spot ETFs and should show a similar willingness to permit the trading of Bitcoin spot ETFs.”
The letter further confronts the SEC on its continuing effort to ignore Bitcoin ETFs, “numerous spot Bitcoin investment vehicles have been offered,” with over $40 billion in assets under management. Emmer and Soto said:
“However, because these products have been unable to register as ETFs with the SEC, public trading typically occurs at a value that is not equivalent to net asset value, and in fact, these products have recently been trading at steep discounts to their net asset value”.
Permitting futures-based ETFs while simultaneously continuing to deny spot-based ETFs would further perpetuate these discounts and clearly go against the SEC’s core mission of protecting investors.
The congressmen conclude the letter stating:
“The SEC is in a position to approve bitcoin futures ETFs, as reflected by the trading of these products, so it should also be in a position to approve Bitcoin spot ETFs.”
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