Cameron Winklevoss, co-founder of Winklevoss Gemini, has accused the U.S. Securities and Exchange Commission (SEC) of failing to offer a regulatory framework for the cryptocurrency industry. This inaction, argues Winklevoss, has driven investors to increasingly shift towards obscure, unregulated crypto products.
Winklevoss himself is famously familiar with the SEC, having first applied for a Bitcoin exchange-traded fund (ETF) nearly 10 years ago. However, to date, the SEC has yet to approve Bitcoin ETFs from Grayscale Bitcoin Trust (GBTC)-of-which buy cryptocurrency at a large discount and impose hefty fees-or any other exchange.
According to a Morningstar report in July 2022, the lack of approved Bitcoin ETFs “has caused U.S. investors to venture into products like GBTC”–which trades 30% below the BTC price and carries annualized fees of 2%, rather than the average 0.40%. This has resulted in investors fleeing to unlicensed, unregulated offshore platforms, as evidenced by the now-bankrupt cryptocurrency exchange FMX.
Such news demotions have caused the SEC to divert attention to traditional financial actors; although the Wall Street Journal has uncovered anomalies in the filings of spot Bitcoin ETFs. The SEC has thus issued requirements to the exchanges and asset managers-notably ranging from Nasdaq and Cboe Global Market-in an effort to reassure the accuracy of information, and to approve such filings.
Cameron Winklevoss noted that there should be “gatekeeper-like” procedures in place to protect investors. He concluded that the regulator’s job should focus solely on investor protection.
