Bitcoin ETF approval would be a ‘historic mistake,’ says Better Markets CEO

Dennis M. Kelleher, CEO of nonprofit organization Better Markets, has urged the United States Securities and Exchange Commission (SEC) to not approve a spot Bitcoin exchange-traded fund (ETF). He argued that it goes against the core principles of the regulatory body. In a letter addressed to SEC secretary Vanessa Countryman on Jan. 5, Kelleher emphasized that if the SEC were to approve a spot Bitcoin ETF it could lead to investors facing significant risks:

“We submit this supplemental comment letter (which Better Markets very rarely does) because it would be a grave if not historic mistake almost certainly leading to a massive investor harm if the SEC approves the pending rule change.”

Kelleher argued that the proposed product would subject investors to the risk of potential fraud, a concern that has been associated with the crypto industry since its inception. “The approval of these spot Bitcoin ETPs would not only expose investors to a market thoroughly contaminated with fraud and manipulation,” he stated. This comes amid Cointelegraph recently reporting that over 324,000 crypto users fell victim to phishing scams in 2023, with around $295 million in digital assets lost to wallet drainers. Meanwhile, Kelleher further explained that it would also enable the crypto industry to claim that their products are now approved by the United States government. However, prominent crypto commentators dismissed the letter, with Bloomberg ETF analyst James Seyffart criticizing it on social media. In a post on X (formerly Twitter), Seyffart reiterated the substantial effort invested by asset management firms in advancing their applications. Meanwhile, in another post on X, Fox Business journalist Eleanor Terrett reiterated negative remarks that Kelleher has made about crypto in recent times. “It’s worse than a fantasy, it’s a fraud on the public,” she recalled. Kelleher made this comment during an interview with the Institute for New Economic Thinking in May 2023. In more recent news, 11 of the spot Bitcoin ETF applicants submitted 19b-4 amendment forms before the close of business on Jan. 5. These forms are one of the last stages in the SEC approval process, but S-1 documents must be completed in order for U.S. exchanges to begin listing shares of investment securities with direct exposure to crypto. The SEC has until Jan. 10 to approve or reject a spot Bitcoin ETF.