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SEC Commissioner Expresses Concerns Over Spot Bitcoin ETF Despite Voting in Favor of the Approvals

SEC Commissioner Mark Uyeda, although casting his vote in favor of the groundbreaking approvals for spot Bitcoin exchange-traded funds (ETFs), has openly expressed reservations regarding the decision-making process adopted by the commission.

On Wednesday, the United States Securities and Exchange Commission (SEC) granted approval for the establishment of several spot Bitcoin ETFs. While this decision signals a progressive move in the integration of cryptocurrency into mainstream finance, it did not come without its internal controversies.

Commissioner Uyeda, playing a crucial role in the approval process, affirmed his support for the Bitcoin (BTC) ETF applications. However, he has voiced concerns about the analytical methodology employed by the SEC to reach its conclusion.

“The flawed reasoning in the [spot Bitcoin ETF] Approval Order could reverberate for years to come,” he expressed.

Uyeda’s concerns arise from what he perceives as a missed opportunity by the SEC to treat Bitcoin on par with other commodities. In his critique, Uyeda highlighted the commission’s historical tendency to subject Bitcoin ETFs to an unprecedented ‘significant size’ test, a standard he believes the Bitcoin ETFs should have met much earlier.

He argued that this approach sharply contrasts with the treatment of Bitcoin futures Exchange-Traded Products (ETPs) under the same test. According to Uyeda, the SEC’s decision lacks sufficient explanation for this apparent inconsistency.

Uyeda Criticizes SEC for Not Providing Clearer Guidelines

The Commissioner further criticized the SEC for not offering clearer guidelines to applicants who invested years attempting to fulfill the ‘significant market’ requirement. He remarked on the SEC’s introduction of a new standard, which, in his view, left applicants navigating in uncertainty. Uyeda emphasized the imperative for the Commission to enhance transparency and communicate its expectations more clearly, aiming to streamline the approval process.

Uyeda’s concerns extended to the SEC’s rationale for expediting the spot Bitcoin ETF approvals. He sought a more comprehensive understanding of the factors influencing the decision, suggesting a need for the Commission to provide a more robust and well-defined justification for its actions.

Uyeda speculated that the SEC’s motivation for expediting the spot Bitcoin ETF approvals might stem from a desire to secure a first-mover advantage in the dynamic cryptocurrency market. Furthermore, he questioned the absence of analysis regarding the cash-only creation and redemption feature of these ETFs, a critical aspect for preventing fraudulent activities.

Despite these reservations, Uyeda stated, “However, because I have independent reasons for concluding that the applications satisfy the standards for approval set forth in the Exchange Act, I support the issuance of the Approval Order despite my objections to the legal analysis set forth in that order.” This underscores his acknowledgment of the overall compliance of the applications with the specified standards, despite his specific objections to the legal analysis provided in the order.

SEC Approves 11 Spot Bitcoin ETFs

In a widely anticipated move, the SEC revealed on Wednesday that it has approved rule changes enabling the establishment of Bitcoin ETFs in the United States. This decision is anticipated to bring about significant consequences, including the potential transformation of the Grayscale Bitcoin Trust, currently holding around $29 billion worth of Bitcoin, into an ETF.

Furthermore, prominent issuers such as BlackRock’s iShares and Fidelity are gearing up to introduce their own competing funds, with trading poised to commence as early as Thursday. This development marks a pivotal moment in the integration of Bitcoin into traditional financial markets, with major financial institutions entering the space through the launch of ETFs.

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Cryptocurrency is essentially virtual money that operates in a decentralized manner, not through a bank but directly on multiple independent computers.

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