July 5, 2023
By Anjali Kochhar
In a scathing critique of the U.S. Securities and Exchange Commission (SEC), Cameron Winklevoss, co-founder of Gemini, has slammed the regulatory agency for its decade-long failure to approve a spot Bitcoin exchange-traded fund (ETF). Winklevoss’s comments come as the first filing for a Bitcoin ETF approaches its 10-year anniversary since being rejected by the SEC.
The Winklevoss twins initially filed for a spot Bitcoin ETF-like trust in July 2013, aiming to establish an investment vehicle that tracks the price of Bitcoin and trades similarly to stocks on exchanges such as Nasdaq. However, their filing, along with a subsequent attempt in 2018, was ultimately rejected by the SEC. The agency has argued that the proposed spot ETF arrangements have not done enough to safeguard investors from fraudulent and manipulative practices.
Winklevoss expressed frustration at the SEC’s sluggishness, pointing out that every other application for a spot-based Bitcoin ETF has faced a similar fate. He labeled the SEC’s refusal to approve such products over the past decade as a “complete and utter disaster for U.S. investors” and criticised the agency for being a failed regulator.
According to Winklevoss, the SEC’s inaction has deprived investors of the best investment opportunity of the past decade by keeping them “protected” from exposure to Bitcoin. While futures-based Bitcoin ETFs have been given the regulatory green light in the U.S., the absence of options for spot Bitcoin ETFs has pushed investors toward Grayscale’s Bitcoin Trust. Winklevoss referred to this product as “toxic,” emphasising that its conversion into an ETF could resolve the discount it currently trades at relative to its Bitcoin holdings.
Furthermore, Winklevoss accused SEC Chair Gary Gensler of driving innovation offshore and diverting investors towards unlicensed and unregulated venues, including those involved in major financial frauds. He highlighted that investors seeking Bitcoin exposure have been forced to do business with such venues due to the lack of spot Bitcoin ETF options.
Gemini and the SEC have been at odds, with the regulatory agency accusing Gemini of violating securities laws earlier this year. The SEC alleged that Gemini’s “Gemini Earn” product constituted an unregistered securities offering. In addition, a dispute between Gemini and the now-bankrupt firm Genesis, which is also charged by the SEC, has added to the tensions.
Winklevoss expressed hope that the SEC would reflect on its record and refocus on its duties instead of overstepping its power. He praised those striving to bring U.S. spot Bitcoin ETFs to fruition, excluding companies with pending applications or lawsuits.
As the debate over spot Bitcoin ETFs continues, it remains to be seen whether the SEC will address the concerns raised by Winklevoss and other critics and pave the way for a regulated and accessible investment vehicle for Bitcoin in the United States.
About the author
Anjali Kochhar covers cryptocurrency stories in India as well as globally. Having been in the field of media and journalism for over three years now, she has developed a sharp news sense and works hard to present information that goes beyond the obvious. She is an avid reader and loves writing on a wide range of subjects.