The Securities and Exchange Commission (SEC) has received a request for the rejection of all applications for spot Bitcoin exchange-traded funds (ETFs) submitted by top financial institutions. The petition was submitted by Better Markets, a non-partisan nonprofit organization that advocates for strict financial rules.
The organization dismisses cryptocurrency as “little more than a socially worthless gambling chip,” in the letter.
In the letter, Better Markets’ CEO and co-founder Dennis M. Kelleher expressed serious reservations regarding the SEC’s possible approval of a spot Bitcoin ETF. According to him, the approval would expose millions of American investors and retirees to a “speculative, volatile, and socially useless financial product,” posing a “grave threat” to investors.
Kelleher several Reservations
Kelleher highlights several specific arguments against the approval of a spot Bitcoin ETF including maturity concerns, fraud risks, volatility, and manipulations.
He questions the maturity of the Bitcoin market to permit an ETF, citing potential issues like wash trading and a high concentration of Bitcoin ownership among a few individuals.
According to Kelleher, the potential for fraud in the spot Bitcoin market is significant, making it inconsistent with the requirement for exchange rules to prevent fraud and manipulation and protect investors and the public interest.
The co-founder of Better Markets argues that Bitcoin’s volatility should disqualify it as an investment product, pointing to price charts showing periods of flat prices followed by wild fluctuations.
“This volatility presents hazards to the public that are at odds with the duty to safeguard investors and the general welfare,” Kelleher maintained.
Kelleher also claims that the regulated market is too small to prevent manipulation, and surveillance-sharing agreements would offer little restriction.
Insight into Better Markets
Better Markets, termed by the New York Times as “Occupy Wall Street’s suit-wearing cousin,” is a non-partisan nonprofit lobbying for increased financial regulation on Wall Street. The organization has a history of staunch criticism of cryptocurrencies.
The letter is part of ongoing efforts by Better Markets to influence lawmakers and regulators to curb the expansion of regulatory acceptance for cryptocurrencies. In 2022, the organization spent $3 million, according to its annual report, and has received endorsements from figures such as President Barack Obama, Senator Elizabeth Warren, and SEC Chair Gary Gensler.
Better Markets Controversial History
The now-bankrupt FTX Derivatives Exchange had once noticed Better Markets and offered to donate $1 million to help the organization’s application for approval by the CFTC. However, the co-founder had tagged the donation “a direct quid pro quo,” with Kelleher angrily rejecting it and encouraging the CFTC to deny the application.
The lobbying firm has been very vocal about its disapproval of cryptocurrencies and this current letter is just one of several that it has sent pleading with legislators and authorities to cease legalizing more cryptocurrencies.