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SEC Forced to Clarify Bitcoin ETF Rules After…
The US Securities and Exchange Commission (SEC) was forced to reiterate and clarify its position on Bitcoin exchange-traded funds (ETFs) after its X (formerly Twitter) account was “compromised” by a post that incorrectly stated that ETFs linked to the spot price of Bitcoin had been approved for launch.
On Tuesday, SEC Chairman Gary Gensler said the regulator’s account on X had been compromised and that the alleged report was untrue.
The agency has not approved any spot bitcoin ETFs, and the earlier, now-deleted post was submitted by an unauthorized user, Gensler said.
“The SEC has not approved the listing and trading of exchange-traded products based on spot bitcoin,” Gensler said on X.
“The unauthorized tweet regarding Bitcoin ETFs was not published by the SEC or its staff,” an SEC spokesperson confirmed to MarketWatch in an email.
The SEC found that “there was unauthorized access and activity” on the agency’s X account by “an unknown party,” an agency spokesperson said, adding that “the access did not authorized has been terminated” and that the SEC will work with law enforcement to investigate the matter.
Bitcoin (BTCUSD) briefly rose more than 2% on Tuesday afternoon after the unauthorized post was published, before tumbling. The cryptocurrency is down 2.4% over the past 24 hours to around $45,840 (£36,007), according to CoinDesk data.
Cryptocurrencies have been some of these Best performing ETFs in 2023as Morningstar analysis shows.
Cryptocurrency market participants have widely anticipated that the SEC will soon approve a spot bitcoin ETF. The agency has until January 10 to make a decision on the bitcoin ETF application, which was filed by ARK Investment Management AND 21Shares.
Today, both BlackRock and Ark Investment Management announced fee cuts for their Bitcoin ETF offerings. BlackRock lowered the fee on its iShares ETF by five basis points to 0.25%, while Ark’s 21Shares ETF will trade with a 0.21% fee, according to Bloomberg.
The agency first approved a bitcoin futures ETF in late 2021, but has not approved any ETFs that invest directly in the cryptocurrency, arguing that bitcoin spot markets could not be sufficiently monitored to prevent fraud and manipulation.
Last August, a federal judge ruled that the SEC’s reasons for rejecting Grayscale Investments’ request to list a spot bitcoin ETF were “arbitrary and capricious” and in violation of federal administrative law.
The judge argued that the SEC’s decision to approve two bitcoin futures funds but deny a bitcoin spot fund violated the law’s principle that agencies “shall treat similar cases equally,” because prices on the futures market on bitcoin closely followed those on the spot market.
Commenting on the case, Susannah Streeter, head of finance and markets at Hargreaves Lansdown, said the incident highlighted the “pump and dump” nature of cryptocurrency scams.
“Fans have been anxiously awaiting regulatory approval for spot Bitcoin ETFs, and scammers have clearly exploited this desire for legitimacy to game the system again,” he said.
“Investors should be cautious about seeking to leverage cryptocurrencies exclusively in these moments of momentum, particularly considering the highly volatile journey cryptocurrencies have been on.
“The events of the last 24 hours should also serve as a warning: scammers running pump and dump schemes are numerous in the Wild West of cryptocurrencies, and speculators can find themselves badly burned.
“Globally, it is still unclear what the regulatory landscape will look like and anyone considering cryptocurrency speculation should proceed with caution, use money they can afford to lose, and only invest on the margins of their well-diversified portfolios.”
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