Gary Gensler riled up the broader crypto community after the U.S. Securities and Exchange Commission (SEC) reaffirmed Bitcoin’s status as a commodity. Many were not convinced this was the right approach from the SEC as questions began flying around.
The effect on the Grayscale proposed BTC exchange-traded funds (ETF) is the major question asked, as well as why Ethereum was not included as a commodity.
Revealing why the commission decided to do so, Gensler disclosed to CNBC’s Jim Cramer that Bitcoin has no security features. Gensler added that other crypto assets have their own key security features, except for Bitcoin. As a result, labelling the flagship digital token as a commodity is fair enough.
Grayscale’s Proposed Bitcoin ETF Plan
Following the remarks from the SEC’s chair, opinions have been flying on the hurdle the Grayscale ETF project will likely face. Grayscale has previously applied to convert its Bitcoin Trust into a spot-based ETF. However, the application awaits the decision of the SEC, which the commission will announce on July 6.
An ETF expert at Bloomberg Intelligence, James Seyffart, commended Gensler for his stance on Bitcoin, adding that it is a positive for the token. However, Seyffart reiterates that the move may not count on Grayscale’s application being approved next month.
This isn't new from Gensler, but definitely positive IMO. Unfortunately this isn't enough for approval of $GBTC's conversion into a spot #Bitcoin ETF. Odds of SEC approval next week (or this week) are near zero in our opinion. https://t.co/mvRnkajGdd
— James Seyffart (@JSeyff) June 27, 2022
Eric Balchunas, another ETF analyst at Bloomberg, echoed Seyffart’s position by saying that the chance of Grayscale getting approval is slim.
One grey area that supporters of Bitcoin want the SEC to clarify is Ethereum’s status. The SEC chairman refrained from commenting on whether Ethereum is in the same spot as Bitcoin as a commodity. The question arises after the previous announcement from the SEC and Commodity Futures Trading Commission (CFTC) labeling Ethereum a commodity.
Nevertheless, the SEC will still have to answer the burning question of why Ethereum is omitted from the same boat as Bitcoin after the previous announcement.
Is Gensler’s Remark a Positive for Bitcoin?
Many industry insiders have posited that the SEC chair’s position on Bitcoin is, in fact, good for the flagship digital currency.
According to Michael Saylor, Bitcoin is good for adoption as a treasury reserve asset, just like gold. Because of this, governments and private institutions can use it as a buffer to expand the economy and stabilize prices.
Meanwhile, the founder of Blockchain Investment Group, Eric Weiss, noted that Gensler is the commission’s second chair to have declared BTC as a commodity. It will be difficult to change the classification in the future, added Weiss.
Another price slump for Bitcoin accompanies the latest news as it fell from $21,478 to $20,635 following a 24-hour positive performance.
Ethereum has dropped to $1,171 from $1,234 as the bears continue to tighten their grip on the crypto market.
The bears have been in control in the past few weeks as the market struggled to find a balance.
The market correction will likely continue for some time as solutions have been exhausted to bring the situation under control.