The CEO of Better Markets, Dennis Kelleher, wrote a letter on Friday, asking the United States Securities and Exchange Commission (SEC) to not approve a Spot Bitcoin Exchange-Traded Fund (ETF). The chief executive of the non-profit organization claimed that an approval would go against the agency’s core principles.
Better Markets Letter to the SEC
In the letter addressed to SEC secretary Vanessa Countryman, Kelleher noted that if the SEC were to approve the Spot Bitcoin ETF applications submitted by firms like BlackRock, Grayscale, Franklin Templeton, and others, investors would face significant risks.
The letter reads:
“We submit this supplemental comment letter (which Better Markets very rarely does) because it would be a grave if not historic mistake almost certainly leading to a massive investor harm if the SEC approves the pending rule change.”
Exposure to Fraud
The Better Markets executive claimed that the proposed Spot Bitcoin ETFs by leading asset management firms would put investors’ money at “grave” risk by exposing them to potential fraud. Kelleher noted that the digital asset sector has an abundance of fraud cases. He stated:
“The approval of these spot Bitcoin ETPs would not only expose investors to a market thoroughly contaminated with fraud and manipulation, it would also enable the crypto industry to claim or imply that their products are now approved by the United States government.”
Kelleher believes that following the approval of a Spot BTC ETF, digital asset businesses will flood the U.S. market with “marketing propaganda” while “suggesting that the SEC’s action legitimized crypto and that retail investors should feel more secure in investing in crypto as a result.”
As per an earlier report titled “2023 Wallet Drainers Report” by blockchain security platform Scam Sniffer, around 324,000 digital asset users fell victim to phishing scams in 2023, with a total of close to $295 million in digital assets lost to scammers.
Related reading: Everyone’s a Scammer
Criticism of Kelleher’s Letter
Multiple supporters of the digital asset community criticized Kelleher’s letter, with Bloomberg ETF analyst James Seyffart posting on social media platform X that the ETF applications cannot be rejected considering the substantial effort invested by asset management firms in advancing their applications with the SEC over the last few months.
Some people also pointed out the errors in the letter, with one X user calling out the authors for mentioning that the price of “Bitcoin rose dramatically at the end of 2002.”
Another X user referenced the court’s verdict in the Grayscale lawsuit in 2023, wherein the judges said that “in the absence of a coherent explanation, this unlike regulatory treatment of like products is unlawful.”
“The SEC claims are either true or not. If the claims of the SEC are true, the SEC may provide a coherent explanation of why the products are actually not “like” products. The SEC may also submit some other lawful/valid reason that warrants denial, if one exists. Or, the SEC may simply approve the ETF’s,” the X user explained.
In another X post, Fox Business journalist Eleanor Terrett pointed out several instances when Kelleher made negative remarks on digital assets. One of his remarks was:
“It’s worse than a fantasy; it’s a fraud on the public.”
The unfolding debate underscores the complexity and contentious nature of approving Spot Bitcoin ETFs, balancing investor protection with the desire for market expansion. As the SEC weighs its decision, the digital asset community remains on edge, anticipating the potential ramifications of this historic regulatory move.
