Four members of Congress have dispatched a letter to the Securities and Exchange Commission (SEC) today calling for immediate approval of a spot Bitcoin Exchange-Traded Fund (ETF).
The letter argues that the SEC’s recent appeals court loss to Grayscale Investments underscores the untenability and unlawfulness of the agency’s existing policy of rejecting such ETFs. “There is no reason to continue to deny such applications under inconsistent and discriminatory standards,” they wrote.
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The letter, signed by Reps. Mike Flood (R-NE), Tom Emmer (R-MN), Wiley Nickel (D-NC) and Ritchie Torres (D-NY), urged the SEC not to continue its alleged discriminatory practices against such ETPs, writing
“A regulated spot bitcoin ETP would provide increased protection for investors by making access to bitcoin safer and more transparent. Congress has a duty to ensure the SEC approves investment products that meet the requirements set out by Congress.”
The appeal underscores an intensifying dialogue around the need for consistent and transparent regulatory standards in the crypto industry, particularly in the wake of the U.S. court of appeals decision in favor of Grayscale Investments LLC.
The lawmakers emphasized that the Court of Appeals determined Grayscale’s proposed Bitcoin ETP closely aligned with the approved Bitcoin futures ETFs in terms of relevant regulatory criteria. The court also questioned the SEC’s lack of clarity in dismissing the evident financial and mathematical relations between the spot and futures markets, stating that it falls below the standard for reasonable decision-making, concluding that this unequal regulatory treatment of similar products is illegal absent a clear explanation.
The lawmakers contended that a regulated spot Bitcoin ETP would provide increased protection for investors by making access to Bitcoin safer and more transparent. They urge the SEC to approve these products immediately, reflecting a growing sentiment among some legislators that the SEC should adopt a more accommodating stance toward the crypto industry.
This call to action comes as the crypto industry attracts increased attention from traditional financial institutions. According to JP Morgan analysts, the SEC may be compelled to approve the spot Bitcoin ETF applications submitted by multiple firms after the court ruling against it in the Grayscale case. They believe that any backtrack on previously approved futures-based ETFs to reject Grayscale’s conversion request and spot Bitcoin ETF applications would be disruptive and embarrassing for the SEC.
However, while the momentum appears to be shifting toward regulatory approval for spot Bitcoin ETFs, it is essential to note that former SEC chair Jay Clayton has said that the approval of a Bitcoin ETF is inevitable but remains unsurprised by the current delay in SEC decisions.
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