A group of bipartisan lawmakers sent a letter to SEC Chair Gary Gensler urging him to approve applications for spot bitcoin exchange traded products (ETP). The Congressmen argued that regulated spot bitcoin ETPs would enhance investor protection through increased transparency. The letter, signed by Republican Congressmen Mike Flood and Tom Emmer, and Democrat Congressmen Wiley Nickel and Ritchie Torres, specifically asked Gensler to "ensure" that the SEC stops discriminating against spot bitcoin ETPs. The lawmakers criticized the SEC's denial of Grayscale's application to convert its bitcoin trust into a spot bitcoin ETP, stating that it violated the SEC's duty and fell short of the standard for reasoned decision making. They also highlighted a recent Court of Appeals decision that found Grayscale's proposed bitcoin ETP to be materially similar to previously approved bitcoin futures ETPs, indicating that the SEC's differential treatment of similar products is unlawful.
The SEC denied Grayscale's proposed conversion in June 2022, but the decision was recently unanimously vacated by the Court of Appeals for the DC Circuit. In response to the lawmakers' letter, Peter Knez, chairman of the Venom Foundation and former CIO of Barclays Global Investors, stated that the approval of a spot bitcoin exchange traded fund (ETF) from Grayscale or BlackRock would lead to increased participation in the digital asset market by institutional and retail investors. Knez predicted that other asset managers would follow suit.
The SEC has also faced delays in its decision regarding proposed spot bitcoin ETFs from BlackRock, WisdomTree, Invesco Galaxy, Valkyrie, Bitwise, VanEck, and Fidelity. These delays have left investors and industry participants eagerly awaiting a resolution on the matter.
