In a scathing critique of the U.S. Securities and Exchange Commission (SEC), Cameron Winklevoss, co-founder of cryptocurrency exchange Gemini, has condemned the regulatory body for its decade-long refusal to approve a spot Bitcoin exchange-traded fund (ETF).
In a Sunday tweet, the crypto guru claimed that the SEC’s actions have been detrimental to U.S. investors and demonstrated its failure as a regulator. Winklevoss’s statement came on the 10th anniversary of his initial filing for the first spot Bitcoin ETF.
Over the years, the SEC has repeatedly rejected proposals for spot Bitcoin ETFs, denying investors the opportunity to access one of the best-performing assets of the last decade. Winklevoss argued that this refusal had had significant negative consequences, forcing investors into alternative avenues that offer suboptimal options. Specifically, he highlighted the Grayscale Bitcoin Trust (GBTC) as a prime example.
According to him, the SEC is a failed regulator because it “‘protected’ investors from the best-performing asset of the last decade -pushed investors into toxic products like the Grayscale Bitcoin Trust (GBTC), which trades at a massive discount to NAV and charges astronomical fees.”
Moreover, Winklevoss pointed out that the SEC’s refusal to approve spot Bitcoin ETFs had pushed spot Bitcoin activity offshore, diverting it to unlicensed and unregulated venues. This trend poses potential risks for investors who seek exposure to cryptocurrency but are forced to operate in a less secure environment.
Winklevoss accused the SEC of indirectly leading investors into the arms of FTX. This cryptocurrency exchange was embroiled in one of the largest financial frauds in modern history. In his view, by failing to provide a regulated avenue for investors to access Bitcoin through spot ETFs, the SEC inadvertently directed them to less trustworthy platforms, exposing them to more significant risks.
Calling for a reassessment of the SEC’s approach, Winklevoss suggested that the regulatory body should focus on its core responsibilities of investor protection, fostering fair and orderly markets, and facilitating capital formation. By doing so, the SEC could have achieved far better outcomes for U.S. investors.
This critique from Winklevoss comes in the wake of recent statements by the SEC that ETF filings by BlackRock and others were “inadequate”. SEC Chair Gary Gensler has expressed concerns over investor protection, market manipulation, and the need for robust regulatory oversight before greenlighting such products, stating last month that “There’s nothing about the crypto securities markets that suggests that investors and issuers are less deserving of the protections of our securities laws.”
However, Gensler’s assertions have been heavily criticized, with industry players accusing him of overreaching his mandate under U.S. securities laws. Notably, in the past few weeks, calls for his sacking have increased, with pro-crypto congressman Warren Davidson filing a bill last month to reform the SEC and remove the “tyrannical Chairman” Gary Gensler.