In a bipartisan effort, members of Congress from both parties have sent a strong message to Securities and Exchange Commission (SEC) Chair Gary Gensler, urging the approval of Bitcoin (BTC) spot exchange-traded funds (ETFs) and an end to discriminatory practices. 

The letters, sent before Gensler’s hearing before the House Financial Services Committee, highlight the need for fair treatment and increased investor protection in the cryptocurrency market.

Congressional Pressure Mounts For Approved Bitcoin ETFs

The first letter, signed by representatives Tom Emmer, Mike Flood, Wiley Nickel, and Ritchie Torres, emphasizes the SEC’s responsibility to ensure that investor protection standards are met while providing access to innovative investment products. 

The representatives cite the recent Grayscale vs. SEC case, where the United States Court of Appeals for the District of Columbia ruled in favor of Grayscale, stating that the SEC violated the Administrative Procedures Act. The court’s decision underscores the inconsistency and discriminatory nature of the SEC’s stance on spot Bitcoin ETFs.

Congressional support for spot Bitcoin ETFs stems from the belief that such products would enhance investor protection and promote transparency in accessing Bitcoin. 

The lawmakers argue that the SEC should adhere to its guidance by approving regulated spot Bitcoin ETFs, as market participants have heeded Gensler’s calls to come forward and register with the commission. 

They assert that Congress must ensure the SEC approves investment products meeting established requirements.

In a separate letter, all GOP members expressed concerns about stakeholder feedback and its potential economic consequences. They call for a temporary halt on licensing or implementation, allowing for a comprehensive review of community input and expert analysis. 

This review would include a cost-benefit analysis, an assessment of comments, and an evaluation of potential complexities. The GOP members aim to develop proposals catering to smaller investors and fostering capital formation.

Chairman McHenry Warns SEC Chair

During the ongoing hearing, Chairman Patrick McHenry has been particularly critical of Gensler’s lack of response to oversight requests. McHenry even threatened Gensler with a congressional subpoena if he ignored these requests, emphasizing the need for accountability. 

According to Journalist Eleanor Terret, the differences in opinion between Democrats and Republicans regarding Gensler’s performance at the SEC are stark and reflect the growing impatience among lawmakers.

One of the key points raised during the hearing is whether Bitcoin should be classified as a security. Gensler clarified that Bitcoin does not meet the Howey Test, which determines whether an asset qualifies as a security under current law. 

As the hearing progresses, the spotlight remains on Chair Gensler and his response to congressional concerns. The outcome of this engagement will have significant implications for the future of Bitcoin ETFs and the overall regulatory framework for cryptocurrencies.

Featured image from Shutterstock, chart from TradingView.com