SEC Chair says staffs’ recommendation will be vital for Bitcoin Spot ETF approvals after Grayscale ruling

• SEC chair Gary Gensler has indicated Bitcoin spot ETF filings are under review, noting that staff recommendations will have a bearing.
• The comment was in response to Tennessee Senator Bill Hagerty, asking what the commission criteria for approval entails.
• Following the Grayscale ruling, impatience continues to grow, with crypto enthusiasts watching the clock for the financial regulator’s decision.
• Meanwhile, the combined AUM of firms that have filed for Bitcoin spot ETFs is now over $16 trillion, with Franklin Templeton joining the race.

US Securities and Exchange Commission (SEC) chair Gary Gensler has responded to a public inquiry about what it would take for the financial regulator to approve a Bitcoin Spot Exchange Traded Fund (ETF). The concern comes amid growing impatience two weeks after Grayscale won its longstanding litigation against the commission.

Also Read: Grayscale law firm Davis Polk urges SEC to approve Bitcoin spot ETF, citing best use of resources

SEC chair response to Senator Hagerty

Amid growing uncertainty and with the market craving an impulse, Tennessee Senator Bill Hagerty asked SEC chair Gary Gensler “what the SEC needs to see in order to approve a BTC Spot ETF.” His question sprouted from Grayscale’s resounding victory on August 29 in its lawsuit against the SEC, when the court determined that the SEC's denial of Grayscale's spot ETF proposal was "arbitrary and capricious" given the commission's failure to explain why similar products are treated differently.

NEW: @SenatorHagerty, referencing the @Grayscale ruling, asked Gensler what the @SECGov needs to see in order to approve a $BTC Spot ETF.

Gensler replied: "We’re still reviewing that decision. We have multiple filings...we're reviewing them and looking forward to staff's…

— Eleanor Terrett (@EleanorTerrett) September 12, 2023

Speaking during the Senate Banking Hearing, Gensler said:

We’re still reviewing that decision. We have multiple filings...we're reviewing them and looking forward to staff's recommendations.

Staff recommendations would most likely be the opinions from individual commissioners, presented as an evaluation of whether the issuers pass the checks of protection against manipulation, efficacy, and investor protection. Another perspective that the commissioners may have to consider is the issue of conflicting services, with Gensler being on record saying it would lead to “limited risk monitoring” during a July 12 Webinar.

In the latest of Gensler’s comments about crypto, the SEC chair says the industry is full of fraud, abuse, and misconduct.

JUST IN: SEC Chair Gary Gensler says crypto is full of fraud, abuse and misconduct. pic.twitter.com/YzZNbbjrF0

— Watcher.Guru (@WatcherGuru) September 12, 2023

The five-member team comprises three Democrats (Gary Gensler, Caroline Crenshaw, and Jaime Lizárraga) and two Republicans (Hester Pierce, and Mark Uyeda). This explains why former SEC staff John Reed Stark said a Republican taking office after the 2024 elections would bode well for crypto, as it would give Republicans a majority in the commission. Under the current regime of President Joe Biden, the Democrats have the majority, with Biden having appointed Gensler himself.

US SEC hell-bent on delays even after Grayscale victory

The crypto market had received the victory very well, interpreting it as a step closer to a positive decision from the commission. Two weeks later, there is still no forthright or directional bias from the SEC, with several records of delayed decisions.

The record of delayed orders comprises WisdomTree, Invesco, Valkyrie, Fidelity, VanEck, Bitwise, and BlackRock.  Meanwhile, the markets’ eyes remain peeled for around October 15, when the commission could likely provide a joint decision for all seven applicants. It is worth mentioning that with Franklin Templeton joining the Bitcoin Spot ETF campaign, the combined assets under management (AUM) of firms in the race goes above $16 trillion, with BlackRock boasting a staggering $9 trillion.

Between Blackrock, Fidelity, Invesco, and now Franklin Templeton -- the combined AUM of firms that have filed for Bitcoin spot ETFs is now over $16 trillion.

— Will Clemente (@WClementeIII) September 12, 2023

Franklin Templeton asset manager is the latest entrant, with an AUM of $1.5 trillion to its name. The addition has the GBTC discount closing in further, now trading at just a 17% discount to NAV.

GBTC discount

This is the closest that the trust has tracked the underlying Bitcoin since December 2021.