The US SEC is rigid on consumer protection

SEC Willing To Approve a Spot Bitcoin ETF if Adequate Surveillance Measures Are in Place

  • The United States Securities and Exchange Commission seems willing to approve a spot ETF if adequate surveillance measures are in place.
  • A footnote in a recent letter said as much, saying that it would overcome concerns about investor protection.
  • The SEC is stubborn in its demands for investor protection and wants more supervision of the market before it allows such developments as a spot ETF.

The United States Securities and Exchange Commission appears to be opening up to a possible spot bitcoin ETF in the near future, judging by a footnote in an approval letter of Teucrium’s ETF. Teucrium CEO Sal Gilbertie highlighted the footnote in the letter, which effectively said that if exchanges implemented adequate surveillance measures, a spot ETF would be approved.

The primary concerns the SEC has with a spot crypto ETF have to do with market manipulation and fraud. The footnote in question reads,

“If, however, an exchange proposing to list and trade a spot bitcoin [product] identifies… the regulated market with which it has a comprehensive surveillance-sharing agreement, the exchange could overcome the Commission’s concern….”

The SEC has been notoriously hesitant to approve a spot crypto ETF, for fear of inadequate investor protection. It has repeatedly said that the market must have better measures to protect investors to see a spot ETF. Meanwhile, those inside the crypto industry have said that a spot ETF would be better for investors in the long run, as it would serve as a legitimate gateway to invest, as opposed to unregulated platforms.

The Teucrium ETF that the SEC has approved was a bitcoin futures ETF, and it was in this approval letter the footnote was present. In fact, it has approved several futures ETF, and it has not had an issue with this particular kind of fund. But investors and market enthusiasts have been keen on a spot ETF — which does not look like it could be happening anytime soon.

SEC’s ETF Decisions Coming to a Boil

The lack of a spot crypto ETF has irked many in the crypto market, which has long been hoping for an approval. It has been years since applications have been steadfast on its demands. This has led to a growing impatience — and Grayscale Investments has said that it may even file a lawsuit.

The SEC is waiting on more authority before it allows the crypto market any more legitimacy. It has made that clear and wants more supervision and controls for the crypto market in general before allowing such a development as a spot ETF approval.

One of those demands will be the supervision of exchanges, which it does not have any influence over. The SEC has launched lawsuits against projects for alleged securities violations, but that has been the extent of its power.