The US Securities and Exchange Commission (SEC) has a chance to standardize cryptocurrency regulations by greenlighting a spot Bitcoin (BTC) exchange-traded fund (ETF), according to an editorial in Bloomberg.
The opinion piece, released on Wednesday, came in the wake of a court decision which overturned the SEC’s earlier denial to Grayscale Investments regarding its proposal to transform its Grayscale Bitcoin Trust (GBTC) into a spot ETF. This has reignited the discourse around the matter.
The editorial contends that the SEC should give the green light to spot Bitcoin ETFs. However, this approval should hinge on the premise that the cryptocurrency exchanges in question adhere to the same regulatory standards set for their peers in the conventional financial sector.
By establishing such uniformity in regulation, renowned ETF sponsors like BlackRock and Fidelity would be incentivized to ensure adherence to compliance standards, the Bloomberg editorial posits. This perspective was further emphasized in a shared post by Bloomberg Intelligence’s ETF analysts, Eric Balchunas and James Seyffart.
Approving spot ETF a path to regulate crypto
The editorial goes on to reason that by endorsing spot Bitcoin ETFs, the SEC would be better positioned to navigate the intricacies of regulating Bitcoin and other digital assets.
The piece highlighted the regulatory quagmire surrounding Bitcoin, which is deemed a commodity and thus is within the purview of the Commodity Futures Trading Commission (CFTC) — but this is solely in relation to futures trading.
By greenlighting the pending spot Bitcoin ETF applications that the SEC is currently reviewing, the regulator could implement coherent standards throughout the crypto sector. This would also encompass digital currencies that may not neatly align with traditional categorizations, as emphasized by the editorial.
Furthermore, the piece argues that such approvals can be facilitated without compromising the SEC’s mandate to uphold securities laws effectively.
The SEC ‘shouldn’t stop people from making bad decisions’
The editorial intriguingly drew attention to what it described as “Bitcoin’s many flaws,” listing issues such as its pronounced volatility, considerable transaction fees, limited throughput, and a significant environmental impact.
Yet, as the article underscores, the regulator’s role isn’t to prevent individuals from potentially poor judgments. Instead, the editors advise that the SEC should prioritize safeguarding investors and ensuring adherence to established standards within the burgeoning crypto domain.
