WSJ Slams SEC's Rejection of Bitcoin ETF as 'Incomprehensible'

The Wall Street Journal editorial board publicly blasted Gary Gensler for his “legendary” refusal to approve a bitcoin spot exchange-traded fund (ETF).

On July 6, the Wall Street Journal published a strongly worded opinion piece, noting that the U.S. Securities and Exchange Commission (SEC), led by Gensler, differed from traditional applications for Bitcoin-related exchange-traded products (ETPs). The treatment of assets and other commodities is markedly inconsistent.

So far, the SEC led by Gensler has rejected all Bitcoin spot ETP proposals, including two proposals from Grayscale and Bitwise last week, which led to Grayscale's decision to sue the SEC.

These unanimous rejections led SEC Commissioner Hester Peirce to declare that Gensler's resistance to spot crypto ETPs "became legendary" because the Commission had already approved several Bitcoin futures ETPs, which cost significantly more than the proposed spot ETPs. For investors, it involves greater risks.

Peirce also questioned why ETP products have not been approved in the US, while they have been approved elsewhere.

“To what extent, if anything, has the increasing maturity of the bitcoin spot market, and the success of similar products elsewhere, driven approval?”

The editorial board also noted Gensler's two-pronged approach, making it nearly impossible to get a spot bitcoin product approved.

This includes requiring ETP sponsors to demonstrate that significant bitcoin transactions occur in a regulated market, or that the underlying market must be “uniquely resistant to manipulation outside the protections of traditional markets.”

According to the WSJ, Gensler is "fully aware" that the first criterion simply cannot be met, as nearly all bitcoin transactions currently occur on unregulated crypto exchanges.

The second standard is also extremely difficult for originators, as the SEC has “arbitrarily established” a higher standard for Bitcoin spot ETPs without “explaining how it will be met.”

Eric Balchunas, senior ETF analyst at Bloomberg, told his 107,000 Twitter followers that it was "good to see" that the Wall Street Journal echoed the thoughts of his fellow ETF analyst James Seyffart -- saying Gensler was "holding innovation hostage" to Take control of the cryptocurrency market.

Just a week ago, Grayscale filed legal proceedings against the SEC for rejecting its application to launch a bitcoin spot ETF, saying that the SEC's inconsistent regulations on bitcoin spot and futures ETFs are not consistent with the law requiring regulators to "take similar measures for similar investment vehicles." Consistent treatment" conflicts.