While highly unlikely, some analysts have conceded that there is always the possibility that SEC Chairman Gary Gensler is waiting until the last minute to reject the flurry of applications for spot Bitcoin ETFs.
It exists small chancethat United States Securities and Exchange Commission Chairman Gary Gensler could stop spot approvals Bitcoin ETFs. But Bloomberg analysts suggest it still exists.
In an Oct. 31 tweet, Dave Nadig addressed the question to Bloomberg ETF analysts James Seyffart and Eric Balchunas. This question asked if Gensler does not allow stacking applications for spot bitcoin ETFs only to dismiss them all at once within the framework semi-comedic rug-pull (ie = a quick sale of cryptocurrency at a high price, which causes a subsequent drop in its price).
“I’m sure it will be a lot more boring than this made-up scenario. However, sometimes it really does feel like it’s all a set-up for Gensler’s huge semi-comedic rug-pull,” said Nadig.
In response to the comment, Seyffart admitted that he had been considering such a scenario for several weeks, if not months. “However, it would be absolutely epic of him,” he added.
Balchunas also chimed in and called the eventual rug-pull a go wonderfully sadistic. He further noted that it would probably “sparked a wave of lawsuits” as a reaction.
However, although both analysts considered this scenario to be quite unlikelyBalchunas admitted that rejection at the last minute is not entirely out of the question. This is also one of the reasons why these analysts hesitated to increase the odds of approval of the spot Bitcoin ETF to more than 90%.
Gensler’s thoughts on the spot Bitcoin ETF have come into the limelight recently. A 2019 video shows that Gensler described the SEC’s stance on spot ETF products at the time as “inconsistent”.
Gary Gensler’s history at the helm of the SEC
The Securities and Exchange Commission (SEC) has a rich history of rejecting applications for spot Bitcoin ETFs. These are consistent attempts at approval that first appeared in 2017.
Gensler continues with this approach from his appointment to head the SEC in 2021 onwards. During Gensler’s time at the SEC, all applications were for spot Bitcoin ETFs either delayed, rejected, or pushed aside citing investor protection concerns.
In June 2022, it was led by Gensler SEC sued by cryptocurrency custodian Grayscale. It was a denial of Grayscale’s request for converting an existing bitcoin trust (GBTC) into a spot ETF. The court in this case ruled that the SEC denied the request arbitrarily and capriciously. The SEC opposed this decision she did not appeal any further.
To date The SEC has only approved applications for ETFs on Bitcoin and Ether futures products. The SEC has justified these actions so far by saying that spot products do not have sufficient safeguards to protect investors from market manipulation.