Senator Warren Challenges SEC Over Bitcoin ETF Approval

U.S. Senator Elizabeth Warren has voiced strong criticism against the Securities and Exchange Commission (SEC) for its recent approval of spot Bitcoin ETFs, including those from BlackRock, Grayscale, and Ark Invest. Warren’s critique highlights ongoing concerns about the integration of cryptocurrency into the mainstream financial system and the need for robust regulatory measures.

Warren’s Stance on SEC’s Decision:

In a Twitter post, Warren asserted that the SEC’s decision was both legally and policy-wise incorrect. She emphasized the urgency for the crypto industry to adhere to basic anti-money laundering (AML) rules, especially as it becomes more entrenched in the financial system.

Following the approval of the ETFs, SEC Chair Gary Gensler noted that the Commission operates within the legal framework and court interpretations of the law. He mentioned that the circumstances had changed, referring to a court order that required the SEC to review Grayscale’s application.

The court highlighted the SEC’s inconsistent reasoning in denying Grayscale’s application to convert its Grayscale Bitcoin Trust (GBTC) into a spot Bitcoin ETF, particularly when the SEC had already approved Bitcoin futures ETFs. The court called this unequal regulatory treatment of similar products unlawful.

Senator Warren has been a vocal critic of the cryptocurrency industry, associating it with risks like money laundering and terrorist financing. She has cited instances of significant crypto fundraising by groups like Hamas and Islamic Jihad, although her reference to a $130 million figure has been disputed by blockchain analytics firm Elliptic.

Warren is spearheading the Digital Asset Anti-Money Laundering Act, seeking to extend KYC requirements to a broader range of blockchain entities. This bill, which has gained additional senatorial support, aims to combat the perceived threats posed by cryptocurrencies. It proposes measures like identifying self-custody wallet holders and monitoring their transactions.

Opposition from Crypto Advocacy Groups:

Crypto advocacy groups, such as Coin Center, have criticized Warren’s bill, describing it as an unconstitutional attack on cryptocurrency self-custody, developers, and node operators.In December 2023, Warren targeted crypto industry lobbyists, accusing them of undermining the Biden Administration’s efforts to combat terrorist financing through cryptocurrencies.

Senator Elizabeth Warren’s stance on the SEC’s approval of Bitcoin ETFs and her ongoing efforts with the Digital Asset Anti-Money Laundering Act highlight the complex and contentious debate surrounding cryptocurrency regulation. Her advocacy for stringent regulatory measures reflects broader concerns about the impact of digital assets on the traditional financial system and the need for comprehensive legal frameworks to address these challenges.