Investing in Web 3.0: Gary Gensler’s Warning on Crypto

Investing in Web 3.0: What You Need to Know

United States Securities and Exchange Commission Chair Gary Gensler recently posted a thread on the social media platform X (formerly Twitter) as asset managers await the final word on the approval or denial of their spot Bitcoin (BTC) exchange-traded fund applications.

In a Jan. 8 X post, Gensler called attention to the potential risks of investing in crypto assets, warning investors that asset managers “may not be complying” with federal securities laws and that crypto investments “can be exceptionally risky” and “often volatile.” He also cautioned that “fraudsters continue to exploit the rising popularity of crypto assets to lure retail investors into scams,” such as bogus coin offerings, Ponzi and pyramid schemes, and outright theft.

The SEC chair’s remarks at 3:40 pm UTC came roughly two hours after several spot Bitcoin ETF issuers filed amended S-1 applications with the commission — one of the last moves toward potentially approving the investment vehicle in the United States. Though it’s uncertain at the time of publication whether the SEC will approve one or many at the same time, applications are in from Valkyrie, WisdomTree, BlackRock, VanEck, Invesco and Galaxy, Grayscale, ARK Invest and 21Shares, Fidelity, Bitwise and Franklin Templeton.

As investors consider how to invest in Web 3.0, they should keep in mind that the technology is still evolving and the risks associated with it can be high. It is important to understand the differences between Web 2.0 and Web 3.0, as well as the potential benefits and drawbacks of investing in Metaverse, the Internet of Things, and other Web 3.0 applications. Gary Vee, a leading investor in Web 3.0, has outlined the potential of the technology and how to make money from it.

SEC’s Decision on Crypto ETFs

Gensler has faced much criticism for the SEC’s failure to approve a spot cryptocurrency ETF despite years of applications from different asset managers. In 2021, Canadian regulators allowed firms to list spot Bitcoin ETFs on exchanges.

The S-1 filings on Jan. 8 were expected in line with the SEC’s deadline following the 19b-4 filings on Jan. 5. These filings suggested that the SEC could allow Crypto ETF listings on U.S. exchanges, however, it does not guarantee approval.

The commission still has the option to deny applications, however, it must provide different reasons than it previously used for other ETFs. In August, a federal judge ordered the SEC to reconsider a spot BTC ETF application from Grayscale, claiming the commission was “arbitrary and capricious” in denying the investment vehicle.