Tuesday, January 18, 2022

The US Stock Exchange is moving to allow the first “Bitcoin” fund to be traded With strict controls

The head of the US Securities and Exchange Commission, Gary Gensler, announced that the agency is moving to approve the exchange-traded Bitcoin fund, a move crypto enthusiasts say is needed to push cryptocurrency into the mainstream.

He said that an ETF, which adheres to the Securities and Exchange Commission’s strict rules for mutual funds, can provide investors with the necessary protections,

Gensler, in his first major speech on cryptocurrencies, noted an opening to an ETF, which focuses exclusively on CME Group Inc.’s Bitcoin futures and requires investors to set up a large margin.

“Given these important safeguards, I look forward to employee review of such deposits, especially if they are limited to Bitcoin futures in circulation,” Gensler added, during remarks, Tuesday prepared for the Aspen Security Forum. on the Chicago Mercantile Exchange.

Transparency and manipulation concerns
The SEC under Gensler and his predecessor, Jay Clayton, has repeatedly refused to allow crypto ETFs to operate. The agency has raised concerns about transparency and the potential for manipulation of the bitcoin cash market.

Most pending exchange-traded fund orders were made under the laws of the 1930s, which allow exchanges to list products.

Gensler hinted that he would like to see a deposit seek approval through the 1940 law, which governs mutual funds.

The difference between the two is not only academic; The mutual fund law has much stronger protections for investors, the lawyers said and requires fund boards to provide close oversight over investments. Additional requests include a formal order that board funds be independent, with a restriction on affiliated person trading shares in an exchange-traded fund.

David Grimm, a legal partner at Stradley Ronon in Washington who previously led the SEC’s investment management division, said the additional restrictions could be an advantage for those hoping to list a product, but some might find them. Too stressful.

“It comes with costs, depending on what kind of business model you have, your financing, maybe that’s too much, or it’s something you don’t want to do,” Faila added.

Stocks or commodities?
Gensler’s comments on an exchange-traded fund could add to the debate over whether cryptocurrencies are securities because some current ETFs that track commodities or currencies are not regulated under mutual fund rules, according to brokerage regulators, as US officials classified Bitcoin as a commodity.

There are currently at least 6 applications for Bitcoin ETFs on the exchange now before the SEC.

In his speech, Gensler said that while he is interested in blockchain technology, he sees potential value in cryptocurrencies; He plans to move aggressively to protect investors across the board, adding, “We don’t have enough protection for crypto investors, it’s like the Wild West.”

Those concerns reflect the skepticism that Gensler raised in an exclusive interview with Bloomberg Businessweek, who’s head of the Securities and Exchange Commission said he would not be lenient about protecting investors by creating a regulatory framework.

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