Cameron Winklevoss Critiques SEC's Bitcoin ETF Policy

On 1 July 2023, Cameron Winklevoss, Co-Founder and President of the cryptocurrency exchange Gemini, voiced his criticism of the U.S. Securities and Exchange Commission’s (SEC) handling of Bitcoin Exchange-Traded Funds (ETFs). Marking the 10-year anniversary of the first Bitcoin ETF filing by him and his brother, Tyler Winklevoss, Cameron expressed his disappointment with the SEC’s refusal to approve these products.

According to Cameron, the SEC’s decade-long denial of Bitcoin ETFs has been detrimental to U.S. investors. He argued that the regulatory body, which is supposed to protect investors, has ironically shielded them from the best-performing asset of the last decade – Bitcoin.

Cameron also pointed out that the SEC’s stance has inadvertently pushed investors towards less desirable products. He cited the example of the Grayscale Bitcoin Trust (GBTC), which he claimed trades at a significant discount to its Net Asset Value (NAV) and levies exorbitant fees.

Furthermore, Cameron criticized the SEC for driving spot Bitcoin activity to offshore venues that lack proper licensing and regulation. He also mentioned that investors have been pushed towards FTX, which he referred to as one of the largest financial frauds in recent history.

In his concluding remarks, Cameron urged the SEC to reflect on its track record. He suggested that instead of overstepping its statutory power and acting as the gatekeeper of economic life, the SEC should focus on its mandate of protecting investors, fostering fair and orderly markets, and facilitating capital formation. He believes that adhering to these principles would lead to better outcomes for U.S. investors.

Cameron ended his comments by wishing luck to those who continue to fight for the approval of U.S. spot Bitcoin ETFs.

In a recent development reported by CoinDesk, Fidelity, a leading player in asset management, is making another attempt to launch a spot Bitcoin ETF, the Wise Origin Bitcoin Trust. This move is hot on the heels of a similar filing by BlackRock’s iShares unit.

As per CoinDesk’s report, Fidelity’s first attempt to launch the Wise Origin Bitcoin Trust in 2021 was thwarted by the U.S. Securities and Exchange Commission (SEC), leading to its rejection in 2022. However, the recent filing by BlackRock seems to have sparked a renewed interest in a spot Bitcoin ETF, with other fund companies such as Invesco and WisdomTree joining the race.

In an effort to address the SEC’s concerns about market manipulation, Fidelity’s recent filing includes a “surveillance sharing agreement” with an undisclosed U.S. spot-based Bitcoin trading platform. This agreement aims to provide a layer of transparency and security in the trading process.

CoinDesk also highlights Fidelity’s emphasis on the recent losses suffered by crypto participants due to insolvencies of custodians and centralized exchanges. Fidelity argues that access to a vehicle like a spot Bitcoin ETF could have protected numerous investors from such losses.

Then, on 30 June 2023, Bloomberg reported that the SEC had told Nasdaq and Cboe Global Markets, which filed the Bitcoin ETF applications on behalf of BlackRock and Fidelity Investments, that their filings are insufficient.”

Later that day, Bloomberg provided the following update:

“In a flurry of Friday afternoon activity, Fidelity Investments led a handful of firms that filed a fresh set of applications for a spot-Bitcoin exchange-traded fund to add new details after the US Securities and Exchange Commission indicated that the initial filings were insufficient. The companies — which also include Invesco, VanEck, 21Shares and WisdomTree — are among eight that are seeking to launch what would be an initial crop of US spot Bitcoin ETFs. BlackRock Inc. set off the wave with its surprise filing for such a fund in mid-June. All of the five that refiled Friday indicated that Coinbase Global Inc. will provide market surveillance in support of their funds, a fact that wasn’t included in previous iterations.“

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