Optimism across the cryptocurrency landscape is at its highest level in years as the approval of the first spot Bitcoin (BTC) appears imminent, more than a decade after Gemini co-founders Cameron and Tyler Winklevoss filed the first Bitcoin ETF under the name Winklevoss Bitcoin Trust – only to be rejected four years later in 2017.
With sentiment in the stratosphere, Securities and Exchange Commission (SEC) Chair Gary Gensler saw this as an opportune time to reiterate his warnings to investors thinking about making an allocation to digital assets. Gensler posted a thread on X of “Some things to keep in mind if you're considering investing in crypto assets.”
“Those offering crypto asset investments/services may not be complying [with] applicable law, including federal securities laws,” Gensler said. “Investors in crypto asset securities should understand they may be deprived of key info [and] other important protections in connection [with] their investment.”
He also pointed to the risk involved with crypto, which is known to be highly volatile and has a history of pump-and-dump tokens that eventually fade into obscurity.
“Investments in crypto assets also can be exceptionally risky [and] are often volatile,” he said. “A number of major platforms [and] crypto assets have become insolvent and/or lost value. Investments in crypto assets continue to be subject to significant risk.”
He also sought to warn about nefarious parties using crypto's decentralized nature to take advantage of unsuspecting investors.
“Fraudsters continue to exploit the rising popularity of crypto assets to lure retail investors into scams,” he warned. “These investments continue to be replete [with] fraud- bogus coin offerings, Ponzi [and] pyramid schemes, [and] outright theft where a project promoter disappears [with] investors’ money.”
While the issues highlighted by Gensler are valid, many in the community questioned the timing of the posts and accused him of spreading fear, uncertainty, and doubt (FUD) about the crypto industry ahead of one of the most substantial developments in its history.
This is really a strange stance you are taking a few days before a crucial deadline. Of course People need to be aware of risks but also of the potential which we can clearly understand as greater than all the worries you are raising. Approve this #BTC ETFs and lets move on !
— Cheick Oumar Diallo (@codiallo) January 8, 2024
Many also highlighted the SEC’s history of allowing some of the biggest frauds to happen right under their noses, only to try and hide its complicity in court.
Under @GaryGensler, @SECGov has been caught lying in court in a crypto case and faces possible sanctions for it. It was harshly criticized by a federal judge for its lack of “faithful allegiance to the law” by hiding internal docs on crypto regulation. He let @SBF_FTX’s fraud… https://t.co/66539bLkKX
— CryptoLaw (@CryptoLawUS) January 8, 2024
Others, like Messari founder and CEO Ryan Selkis, highlighted the simplicity of Bitcoin and its ability to sidestep the concerns raised by Gensler, which also apply to traditional investments like equities.
PSA to Gary Gensler:
Bitcoin is the undisputed investment champion across every single time frame in its 15 year history.
Gary forgot to include this in his FUD thread below. https://t.co/Wa1Ku762Yk pic.twitter.com/1RG1P1lKDL— Ryan Selkis (d/acc)? (@twobitidiot) January 8, 2024
X user Manort followed the same line of thinking as Selkis, tweeting, “True, but misleading,” in response to Gensler’s thread.
“All the scams are easily avoided by buying Bitcoin and holding it yourself,” Manor said. “No pyramid, no Ponzi, no disappearing. All of those things also happen with stocks.”
And financial commentator ZeroHedge responded by highlighting that crypto has achieved the level of success it has despite efforts by central banks to enforce it out of existence.
“Unlike banks and the entire Western financial system, crypto has never had a central bank bailout,” they tweeted. “In fact, central banks are actively conspiring against it. And yet its price is fast approaching all time highs having survived countless crises on its own.”
Insight into Gensler's possible motivation for posting this thread can be found in comments made by former SEC Chair Jay Clayton, who said during a recent interview with CNBC that a spot BTC ETF “approval is inevitable,” and added that “there’s nothing left to decide.”
According to The Block, Valkyrie Investments co-founder and CIO Steven McClurg recently stated that the firm is “expecting the SEC will deem the ETFs effective at close of business on Wednesday and the trading [will] begin on Thursday morning.”
VanEck CEO Jan van Eck made a similar statement to CNBC on Tuesday morning, responding in the affirmative when asked if his firm believes that their spot BTC ETF will begin trading on Thursday morning.
