WASHINGTON, D.C.— Dennis M. Kelleher, Co-founder, President, and CEO of Better Markets issued the following statement in response to the U.S. Securities and Exchange Commission’s (SEC) approval of a Bitcoin ETF:
“With the flagrantly lawless crypto industry crashing and burning due to a mountain of arrests, criminal convictions, bankruptcies, lawsuits, scandals, massive losses, and millions of investor and customer victims, who would have thought that the SEC would come to its rescue by approving a trusted and familiar investment vehicle that will enable the mass marketing of a known worthless, volatile, and fraud-filled financial product to Main Street Americans. Bitcoin and crypto are worse than the chips you can buy at a casino because at least the casino is regulated; the spot Bitcoin market is not and that’s what the ETF is going to be pricing. There will be no SEC regulation or policing of Bitcoin.
“Make no mistake about it: the SEC’s actions today are not required by or supported by the facts or law, including not required by the Grayscale court decision, as we spelled out in our comment letters here and here. The court in Grayscale merely said that the SEC failed to sufficiently explain its prior rejection. The SEC could — and should have — rejected the ETF applications and better detailed why it did so, importantly including a showing that “as much as 77.5% of the total trading volume on unregulated exchanges was due to wash trading” and as much as 95% of Bitcoin trading “could be due to wash trading.”
“That’s why this approval of a Bitcoin ETF is an historic mistake that will not only unleash crypto predators on tens of millions of investors and retirees but will also likely undermine financial stability. It will be interpreted and spun as a de facto SEC – if not U.S. government – endorsement of crypto generally. The crypto industry’s marketing machinery can be expected to claim or imply that this decision legitimizes crypto as a safe and appropriate investment for hardworking Main Street retail investors and those saving for retirement. However, the SEC’s action today has changed nothing about this worthless financial product: Bitcoin and crypto still have no legitimate use; remain the preferred product of speculators, gamblers, predators, and criminals; and continue to be cesspools of fraud, manipulation, and criminality.
“As a result of the SEC’s action, America’s investors will have at least four levels of false comfort: first, the SEC’s imprimatur; second, a well-known, trusted ETF investment vehicle; third, the involvement and legitimacy of traditional and trusted financial firms like Blackrock and Fidelity; and fourth, a belief that there will be meaningful regulation and investor protections.
“The truth is there is and will be no effective cop on the Bitcoin beat. The CFTC is supposed to be the cop on that beat, but CFTC Chair Behnam has been little more than a biased crypto cheerleader rather than an independent financial regulator. While meeting with FTX’s CEO Sam Bankman-Fried 10 times in just 14 months, Behnam prioritized expanding the crypto market and his agency’s jurisdiction over the protection of the public. He was a “key ally” to FTX and Sam Bankman-Fried and worked to deliver them regulatory and legislative victories. Even after FTX went bankrupt and $8 billion of customer funds were reportedly missing, he continued to push their top legislative priority in giving crypto jurisdiction to the smallest, least funded, and most easily capturable agency. However, even if the CFTC had a Chair that wanted to be a cop on the beat, the CFTC cannot be one because it has been and continues to be chronically and grossly underfunded.
“Another highly consequential result of this decision will be that crypto gets more interconnected with the core of the traditional financial and banking systems, which will dramatically increase the risk of systemic crashes and bailouts. That’s why this decision is similar to the decision to deregulate derivatives in 2000, which led in just a few years to the catastrophic financial crash in 2008. History may well see this action as lighting the fuse of a crypto boom and what will almost certainly lead to a crypto bust with likely crashes, contagion and worse.”
Better Markets is a non-profit, non-partisan, and independent organization founded in the wake of the 2008 financial crisis to promote the public interest in the financial markets, support the financial reform of Wall Street and make our financial system work for all Americans again. Better Markets works with allies—including many in finance—to promote pro-market, pro-business and pro-growth policies that help build a stronger, safer financial system that protects and promotes Americans’ jobs, savings, retirements and more. To learn more, visit www.bettermarkets.org.
 The CFTC’s entire budget for 2023 was $365 million, and it had just 688 full-time employees. Its enforcement budget is just $67 million with 172 full-time employees, which it needs to police the multi-trillion-dollar derivatives and commodities markets in addition to the bitcoin market. That’s why the unseemly bragging about its so-called enforcement record against “digital assets” is more rhetoric than reality. They aren’t fooling anyone, including the crypto industry which continues to push for legislation putting the CFTC in charge of regulating them. There is a reason they are spending tens if not hundreds of millions of dollars to buy the CFTC as their regulator.