The former head of internet enforcement at the U.S. Securities and Exchange Commission (SEC) has raised concerns about spot bitcoin exchange-traded funds (ETFs), stating that they will give rise to another massive investor scam driven by Wall Street fees. Additionally, he emphasized that these ETFs are likely to be the most centralized crypto mechanism imaginable.
Spot Bitcoin ETF Warnings from Ex-SEC Official
John Reed Stark, a former SEC official, recently posted some warnings about spot bitcoin ETFs on the social media platform X. Currently serving as the president of cybersecurity firm John Reed Stark Consulting, Stark spent 11 years as the chief of the SEC Office of Internet Enforcement and 15 years as an SEC enforcement attorney.
Expressing his skepticism towards spot bitcoin ETFs, Stark stated, "As to whether the approval of a spot bitcoin ETF is a good thing, my view is that it is not." He further cautioned:
The concept of a bitcoin spot ETF is laughable, not only because it will result in yet another Wall Street investor scam involving exorbitant fees, but also because it represents the most centralized form of cryptocurrency mechanism that can be conceived.
The SEC is presently reviewing 13 applications for spot bitcoin ETFs. Last week, the regulator held meetings with several applicants and granted them until the end of the week to make amendments to their filings. Furthermore, the SEC requested that they utilize the cash-creation method instead of the in-kind creation method. Initially, Blackrock, the largest asset manager globally, advocated for the in-kind model and even proposed a revised version. However, the SEC remained unconvinced, resulting in Blackrock adopting the cash method outlined in its latest filing.
Referring to reports of multiple meetings between SEC officials and spot bitcoin ETF issuers, as well as discussions regarding the cash creation method, Stark recently stated that, based on his two decades of experience, "the SEC's approval of some form of bitcoin spot ETF seems likely." He further expressed his opinion as the former chief of SEC's internet enforcement:
I can't help but think that the approval of a bitcoin spot ETF might become a significant aspect of SEC Chair Gary Gensler's legacy. It seems upside down, not only to me but also to most of the cryptocurrency community. Please prove us wrong, Gary.
What are your thoughts on the statements made by former SEC internet enforcement chief John Reed Stark? Share your opinions in the comments section below.
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