Gemini’s co-founder, Cameron Winklevoss, has sharply criticized the U.S. Securities and Exchange Commission (SEC), asserting that its unwillingness to greenlight a Bitcoin ETF has led to adverse consequences for American investors.
For the previous ten years, Winklevoss suggests, the SEC has essentially cornered investors into dealing with “risky” and “non-regulated” crypto offerings. On July 2, Winklevoss chastised the U.S. regulatory authority for its perpetual denial of approval for a Bitcoin spot ETF. This refusal has been consistent for a decade since the first attempt made by the Winklevoss twins to have their ETF approved.
According to Winklevoss, “The SEC’s steadfast denial to approve such offerings for the past decade has been a total disaster for American investors, demonstrating the shortcomings of the SEC as a regulatory institution.”
In his view, the lack of an approved Bitcoin spot ETF has propelled U.S. investors towards “high-risk products” like the Grayscale Bitcoin Trust (GBTC). He argued that GBTC operates at a sizable discount relative to Bitcoin’s actual price and enforces “excessive” fees.
Data from YCharts reveals a 30% discrepancy in GBTC’s net asset value relative to Bitcoin’s price. Additionally, the GBTC annual fee is five times the average of 0.40%, according to financial services firm Morningstar’s study from July 2022.
Furthermore, Winklevoss believes this regulatory stance has prompted U.S. investors to gravitate towards “non-certified and non-regulated” offshore platforms, including FTX, which he condemned as “one of the most significant financial deceptions in contemporary history.”
He suggested, “The SEC might want to reevaluate its dismal track record and focus on executing its mandate of investor protection, rather than overstepping its jurisdiction and attempting to oversee economic life.”
These remarks from Winklevoss follow a string of submissions for a Bitcoin spot ETF made by several companies, including BlackRock, Fidelity, WisdomTree, Invesco, Valkyrie, and ARK Invest.
Reportedly, the SEC has criticized some of these spot ETF filings for lacking clarity and comprehensive details. They have requested the fund managers to make amendments by refining the language of their filings.
Meanwhile, Gemini is entangled in lengthy legal discussions with Genesis, a Digital Currency Group (DCG) subsidiary, which also owns Grayscale, the entity that oversees GBTC. Additionally, the SEC has also taken legal action against the exchange.
The debate over cryptocurrency regulation continues to take center stage. With the evolving cryptocurrency market, regulatory authorities worldwide are under pressure to create a balanced and effective regulatory framework.
In essence, the regulatory discourse around cryptocurrency often boils down to striking a balance between investor protection and fostering innovation. While the U.S. SEC tends to prioritize caution to mitigate potential investor losses, critics like Winklevoss argue that such an approach curbs innovation and compels investors towards more volatile alternatives.
This dynamic discussion reflects the challenge of regulating a constantly evolving industry. Regardless of the final outcome, the regulatory decisions made today will undoubtedly shape the future landscape of cryptocurrency investing.