In a contentious debate, Dennis Kelleher, the CEO of the nonprofit organization Better Markets, has voiced strong opposition to the approval of a spot Bitcoin exchange-traded fund (ETF) by the United States Securities and Exchange Commission (SEC).
In contrast, some prominent figures within the cryptocurrency industry, including Bloomberg ETF analyst James Seyffart, have argued in favor of granting approval. The conflicting views revolve around the potential risks and benefits of introducing a spot Bitcoin ETF.
Better markets CEO raises concerns over investor protection
In a letter addressed to SEC Secretary Vanessa Countryman on January 5, Dennis Kelleher made a compelling case against approving a spot Bitcoin ETF. He contended that such a move could expose investors to significant risks, citing concerns about potential fraud and market manipulation in the cryptocurrency industry. Kelleher’s argument emphasized the need for investor protection and preserving the SEC’s core principles.
Kelleher stated, “We submit this supplemental comment letter because it would be a grave if not historic mistake almost certainly leading to massive investor harm if the SEC approves the pending rule change.” His primary apprehension is that the proposed spot Bitcoin ETFs could provide an avenue for fraudulent activities and manipulation, both of which have been associated with the cryptocurrency market in the past.
The CEO’s concerns align with recent reports revealing that over 324,000 crypto users fell victim to phishing scams in 2023, resulting in approximately $295 million in digital assets being lost to wallet-draining schemes.
Crypto industry seeks regulatory approval
Kelleher further argued that approving spot Bitcoin ETFs would inadvertently grant the cryptocurrency industry credibility and recognition by the U.S. government. This endorsement could lead to increased investor confidence in crypto-related products, which Kelleher views as problematic given the perceived risks in the sector.
However, not everyone shares Kelleher’s apprehensions. Bloomberg ETF analyst James Seyffart took to social media to criticize Kelleher’s stance. Seyffart highlighted the substantial efforts made by asset management firms in advancing their ETF applications, suggesting that such initiatives are driven by a desire to provide investors with more diversified options.
Fox Business journalist Eleanor Terrett also noted Kelleher’s history of negative remarks about the crypto industry. He cited his earlier statement during an interview in May 2023, calling it “worse than a fantasy” and “a fraud on the public.” These remarks underscore the ongoing divide in public opinion regarding cryptocurrencies and their potential impact on traditional financial markets.
Spot Bitcoin ETF applications reach a crucial stage
Meanwhile, the spotlight remains on the 11 spot Bitcoin ETF applicants who submitted 19b-4 amendment forms before the close of business on January 5. These forms represent one of the final stages in the SEC approval process. However, for U.S. exchanges to list shares of investment securities with direct exposure to cryptocurrencies, the S-1 documents must also be completed.
There is widespread speculation that the final approval for spot Bitcoin ETFs may come before January 10, the deadline for an offering from ARK Invest and 21Shares. The outcome of these applications will likely shape the future landscape of cryptocurrency investments in the United States.
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