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19 September 2021

SEC Plan for Bitcoin ETFs Is Like 'Favoring One Child Over Another': Grayscale CEO - Decrypt

SEC Plan for Bitcoin ETFs Is Like 'Favoring One Child Over Another': Grayscale CEO - Decrypt


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In plain English, this could mean that the SEC is likely to give a green light to ETF applications tied to the futures market—synthetic contracts tied to a future price rather than actual quantities of Bitcoin—rather than applications for ETFs backed directly by Bitcoin.

In an interview with Decrypt, Sonnenshein noted that the SEC over the years has approved thousands of ETFs not tied to the futures market and observed that the agency's initial objections to a Bitcoin ETF—founded on the possibility of insiders manipulating the price of Bitcoin—would not be eliminated in the case of an ETF tied to a futures market.

Gensler's apparent preference for a Bitcoin ETF tied to the futures market is likely tied to the fact that such a product would fall under a 1940 law that provides a broader range of investor protection than a similar 1933 law that governs ETFs tied to the stock market.

Sonnenshein also noted that a Bitcoin ETF tied to the futures market would be more costly to create than a spot market one, which would in turn cost more for consumers.

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