[2021-11-05] Lawmakers Urge SEC to Permit Trading of Bitcoin Spot ETFs

[Woodie]

Lawmakers Urge SEC to Permit Trading of Bitcoin Spot ETFs

U.S. Representatives Tom Emmer and Darren Soto sent a bipartisan letter to the chairman of the Securities and Exchange Commission (SEC), Gary Gensler, Wednesday regarding bitcoin exchange-traded funds (ETFs). So far, the SEC has approved two bitcoin futures ETFs but has yet to approve any bitcoin spot ETF.

Rep. 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.

Noting that the SEC approved two bitcoin futures ETFs, Reps Emmer and Soto wrote: “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.”

They explained, “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.”

Referencing the SEC’s previous reasoning for disallowing spot bitcoin ETFs, the lawmakers asserted that “Since the SEC no longer has concerns with bitcoin futures ETFs,” then “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

Read more https://news.bitcoin.com/us-lawmakers-urge-sec-to-permit-trading-of-bitcoin-spot-etfs/

[SFR10]

They have a lot of valid points, but I just read in another article that might have something to do with "submitting Form 19b-4" and getting it approved.

• As someone with limited knowledge in this field, I wonder why should Spot ETFs be under a different regulatory framework?
  
  

  One of the biggest differences between the two types of ETFs lies in the regulatory framework, as they both go through different pathways. Physical ETFs are ruled via the 1933 Securities Act process, which requires exchanges to file a Form 19b-4 to show that the underlying market is not subject to manipulation. In contrast, futures-based ETFs are ruled via the 1940 Investment Company act and therefore do not require the same form.

[DaveF]

Starting with a Democrat and a Republican are working together to get something done wow :-)

I think it's also a bit of inertia with the fact that in the beginning most of the people brining these ETFs forward were smaller companies, who did not have the 'mass' to fight the larger more established rules and establishment. Now that they have the futures and larger places can see the advantages more money (read influence) will come into play.

2022 is going to be interesting with this stuff.

-Dave