With at least 11 spot Bitcoin ETF applications pending approval by the securities regulator in the United States, its chairman issued a warning to investors about making crypto investments.
On Monday, Gary Gensler, the chairman of the Securities and Exchange Commission (SEC), took to X to share that those providing crypto asset services or investments may not comply with the law.
The warning
The chairman asserted that these entities may not be in compliance with federal securities laws. He said that those investing in crypto asset securities need to be aware of the risks.
He added that they might be deprived of essential information as well as essential protections associated with their investment.
Gensler had said back in December that his agency would take a new look at Bitcoin ETFs. Companies like Franklin, BlackRock, Invesco, Fidelity, iShares, Ark, BitWise, Grayscale and VanEck have submitted applications.
However, even though spot Bitcoin ETF applications seem to be poised for betrayal, the SEC boss claimed that crypto remains a risky bet.
Back in June, Gensler had stated that the crypto market was filled to the brim with scam artists, fraudsters, and hucksters.
The explanation
According to Gensler, crypto assets are highly volatile, and investing in them can be exceptionally risky. He highlighted the fact that various crypto assets and platforms have lost value, or become insolvent.
Therefore, he stated that investing in crypto assets is still significantly risky. He was alluding to crypto companies and exchanges that have collapsed.
Some of the most prominent names include Voyager Digital, Terraform Labs, and the FTX crypto exchange.
On Monday, the SEC chief also talked about the scams aimed at crypto investors. TRM Labs, a blockchain intelligence company, published a report in December 2023.
It disclosed that in 2023, the total value of crypto that had been stolen stood at $1.7 billion. But, this is still half of the $4 billion that had been stolen in 2022.
More details
Gensler asserted that fraudsters were exploiting the increasing popularity of crypto assets to lure retail investors into their traps.
He was talking about the scams that target crypto investors in particular, which include Ponzi and pyramid schemes, along with the theft of wallets.
While his comments were similar to an SEC investor alert, many people considered the timing of the warning as a backhanded capitulation.
Those part of Crypto Twitter said that this was the perfect example of capitulation, while others said that they did not want Gensler’s advice for their crypto investments.
Some people called it a sign of victory and said it was only the beginning. After all, the SEC has been cracking down on the crypto industry in the US.
The agency has been against the concept of a spot Bitcoin ETF, but is now reconsidering its decision and there are signs that the tide has turned.