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US Congressmen Lobby SEC Chairman Gary Gensler To Authorize A Spot Bitcoin ETF

US Congressmen Lobby SEC Chairman Gary Gensler To Authorize A Spot Bitcoin ETF

Two United States lawmakers Darren Soto and Tom Emmer have penned a letter to the Securities and Exchange Commission (SEC) chairman Gary Gensler, urging him to greenlight a bitcoin spot exchange-traded fund (ETF).

Representatives Emmer And Soto Call For Bitcoin Spot ETF

As you are well aware, bitcoin futures exchange-traded funds are now trading in the United States market and have so far been welcomed with immense enthusiasm. The financial regulator approving these funds was a huge milestone in the mainstream adoption of cryptocurrencies and is a means for institutional investors to participate in the market.

However, such derivative-based ETFs don’t offer direct exposure to the underlying asset. They only give investors access to futures contracts rather than the asset. This is why pro-crypto Minnesota Congressman Tom Emmer (R-MN) and Florida Congressman (D-FL) Darren Soto are pressing the SEC to approve a pure Bitcoin ETF.

In the letter on Wednesday, Emmer and Soto asked the SEC chair why the agency recently authorized a futures-based bitcoin ETF but has been reluctant to approve those linked to bitcoin itself. For perspective, the SEC has rejected lots of applications since 2013, with no clear sign that it intends to change its position.

The legislators observed that the two Bitcoin futures ETFs that the SEC approved last month are a big step for American investors looking to invest in bitcoin. However, they come at a big price for investors.

“These products are potentially much more volatile than a Bitcoin spot ETF and may impose substantially higher fees on investors due to the premium at which Bitcoin futures typically trade, as well as the cost of rolling futures contracts each month.”

A Spot ETF Offers Investors More Protection Than One Based On Futures

Emmer and Soto are curious as to why the SEC is comfortable permitting a futures-based ETF to trade on the US stock exchange but are not more comfortable allowing Wall Street investors to trade spot-based bitcoin ETFs.

They argue that a Bitcoin spot exchange-traded fund that directly tracks the price of the asset itself “inherently provides more protection for investors”, adding that investors should have a choice of which product suits them and their investment needs.

Moreover, the representatives don’t understand the SEC’s view regarding the differences in risk profiles of the spot and futures markets since they are closely entwined and carry the same risks of manipulation and fraud — a concern that the SEC has cited while stonewalling proposals for a Bitcoin spot ETF.

The letter comes as no surprise, considering the authors. The two representatives have long been pushing to bridge the gap between crypto-assets and fuzzy regulation.

“The SEC is in a position to approve Bitcoin futures ETFs, as reflected by the trading of these products, so it should also be in a position to approve Bitcoin spot ETs. Thank you for your attention to this important matter,” the reps summarized.

A spot ETF backed by physical bitcoin would be an even bigger step for the crypto industry. That said, we probably won’t see a bitcoin spot ETF until 2022.

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