SEC’s Push into ‘Toxic’ Crypto Products and FTX: Winklevoss Impact on Investors

SEC Criticized for Denying Bitcoin ETF Proposal

For the past ten years, the US securities regulator has compelled investors to invest in “hazardous” and “uncontrolled” crypto assets, according to Cameron Winklevoss, co-founder of Gemini.

On July 2nd, the Winklevoss twins criticized the U.S. Securities and Exchange Commission (SEC) for continuously denying their application for a Bitcoin exchange-traded fund (ETF), noting that it has been a decade since they initially submitted the proposal to the regulator.

The Winklevosses contended that, with the lack of an accepted Bitcoin ETF in the U.S., investors have had to resort to “toxic products” such as the Grayscale Bitcoin Trust (GBTC), which trades at an enormous discount to Bitcoin’s price and has “astronomical” fees.

YCharts reports that GBTC’s net asset value discount is currently 30% in comparison to Bitcoin’s price. Furthermore, the GBTC annual fee is 2%, which is significantly higher than the average of 0.40%, as reported in a July 2022 study from Morningstar, a financial services firm.

Winklevoss is of the opinion that the refusal has caused American investors to shift to “unlicensed and unregulated” overseas platforms, with FTX being one of them, which he has labelled as “one of the most significant financial scams in recent times.”

He suggested that the SEC might consider its lackluster performance and, rather than extending its legal authority and attempting to be the regulator of economic activity, concentrate on achieving its goal of safeguarding investors.

Businesses File Applications for Bitcoin ETF Position

Cathie Wood’s ARK Investment Management is said to be the first to apply for a Bitcoin Exchange-Traded Fund.

The Winklevoss’ remarks arrive as numerous businesses have recently submitted, restored or altered their applications for a Bitcoin ETF position, including BlackRock, Fidelity, WisdomTree, Invesco, Valkryie and ARK Invest.

The SEC has declared that certain filings for spot ETFs were not up to their standards, claiming they were not “sufficiently clear and comprehensive”. As a result, the regulator has requested the fund managers to revise their filings with more clarity.

Meanwhile, Gemini is in a lengthy court-mediated negotiation with Genesis, a subsidiary of Digital Currency Group (DCG). DCG owns Grayscale, the manager of GBTC, and the exchange is also facing legal action from the SEC.

Magazine: Miami grapples with the phenomenon of ‘shitcoins on Bitcoin’ in 2023.