Gemini co-founder Cameron Winklevoss said the SEC's inactivity exposes investors to toxic and unregulated crypto products. On July 2, 2023, the Winklevoss twins criticized the United States Securities and Exchange Commission (SEC) for consistently refusing to track Bitcoin exchange-traded funds (ETFs). The twins filed the paperwork to get their ETF approved nearly a decade ago.
Today marks 10 years since @tyler and I deposited for the first place Bitcoin ETF. THE @SECGovThe decade-long refusal to approve these products has been a total disaster for US investors and demonstrates what a failed regulator the SEC is. Here's why:
—Cameron Winklevoss (@cameron) July 2, 2023
SEC Exposed Investors to Toxic, Unregulated Crypto Products: Cameron Winklevoss
The financial watchdog of the United States was supposed to provide a comprehensive regulatory framework for the crypto industry. However, it has yet to provide such a framework and experts say the existing rules are difficult to follow. The recent regulatory crackdown on the industry has caused investors to consider moving overseas.
In June 2023, many entities applied for the Bitcoin ETF, including the world's largest asset manager BlackRock, Fidelity Investments, etc. This scenario created a lot of buzz, with everyone wondering if they would get a green light from the Securities and Exchange Commission.
The Winklevoss twins first applied for the Bitcoin ETF 10 years ago, but their application was rejected. Additionally, Grayscale Bitcoin Trust (GBTC) also filed an ETF application but met the same fate. Cameron argued that the absence of an approved Bitcoin ETF for so long has caused US investors to venture into products like GBTC, which trades at a massive discount to the BTC price and charges huge fees.
The net asset value discount of GBTC is 30% of the price of BTC. Their annual dues are 2%, which is well above the average of 0.40%. This data comes from the latest study conducted in July 2022 by Morningstar, a financial services company.
Cameron Winklevoss also believes the SEC's actions have led investors to turn to unlicensed and unregulated offshore platforms, raising a new set of issues. For example, the now-bankrupt crypto exchange FTX, which took advantage of the problem and collapsed, is the biggest. 'black Swan' event in the history of the crypto industry.
The Gemini co-founder also felt that the regulatory agency should look at the current scenario and try to act as a guardian of economic life rather than overstepping its legal authority to wage war on the industry. The main objective of the agency should be to ensure the protection of investors.
Will the SEC Approve Bitcoin ETF Applications?
Big players in traditional finance (TradFi) are entering the race for Bitcoin ETF approval, but experts say the ride might need to be smoother. The Wall Street Journal reported that the Securities and Exchange Commission found certain shortfalls in spot Bitcoin ETF deposits.
The financial watchdog also notified the Nasdaq and Cboe Global Market exchanges of the irregularities and lack of clarity in ETF applications. The agency then asked exchanges and asset managers to update their applications in order to get an appropriate response from the regulator.
This new filing would delay the creation of the first Bitcoin ETF because, according to the procedure, the agency must take 15 days to file a public comment. Until this process is complete, deposits can be returned up to day 7 for a new deposit. Additionally, the agency has an additional 240 days to approve or reject the filing.