The Securities and Exchange Commission (SEC) has exceeded its statutory authority and denied U.S. investors access to spot bitcoin exchange-traded products (ETPs) that other investors around the globe benefit from, according to U.S. Reps. Tom Emmer (R-MN) and French Hill (R-AR).
“The SEC’s approach to cryptocurrency regulation has been unacceptable,” House Majority Whip Emmer said on Tuesday. “The SEC must provide consistency of treatment to the marketplace and retail investors in the United States are worse off because of the [SEC] chair’s decision to deny all bitcoin spot ETP applications.”
“The reasoning behind the SEC’s continued refusal to approve a spot bitcoin ETPs appears to be inconsistent and doesn’t take into account what we know from other jurisdictions where regulators have approved similar products,” added Rep. Hill.
The lawmakers reiterated their disdain in an April 18 letter sent to SEC Chairman Gary Gensler, noting that during the last 10 years, more than 20 spot bitcoin ETP applications have been filed with the SEC, but none have been approved.
“These products would provide investors with an opportunity to access bitcoin using a familiar, well-understood product without owning the underlying asset itself,” wrote the members. “A regulated spot bitcoin ETP would provide increased protection for investors by making access to bitcoin safer and more transparent.”
Reps. Emmer and Hill also questioned the SEC’s decision to approve futures bitcoin ETPs while denying spot bitcoin ETPs, writing that the SEC “appears to be picking winners and losers based on factors that are not consistent.”
The result is that retail investors are currently losing over $6.9 billion in trapped value by being unable to trade in a product that tracks bitcoin in real time, according to their letter.
The congressmen requested that Gensler explain the SEC’s decision to deny every spot bitcoin ETP that has been proposed, as well as the agency’s justification for denying spot bitcoin ETP applications when the SEC has granted approval for several bitcoin ETPs that are based on the same underlying markets. They want Gensler’s responses by May 2.
“Chair Gensler has exhibited regulatory inconsistency between his treatment of bitcoin futures ETPs, which he has allowed to trade in the United States, and bitcoin spot ETPs, which he continually denies the American people from accessing,” Rep. Emmer said. “We look forward to the SEC’s response to our concerns.”