SEC’s Refusal of Spot Bitcoin ETF Has Led Investors to Toxic Products: Winklevoss

Gemini co-founder Cameron Winklevoss has criticized the U.S. Securities and Exchange Commission (SEC) for refusing to approve a spot Bitcoin exchange-traded fund (ETF).

Winklevoss said that the SEC’s refusal has forced investors into “toxic” products like the Grayscale Bitcoin Trust (GBTC), which trades at a massive discount to the price of Bitcoin and charges “astronomical” fees.

GBTC’s net asset value discount is currently at 30% compared to Bitcoin’s price, according to YCharts. The GBTC annual fee is 2%, compared to an average of 0.40%, according to the latest July 2022 study from financial services firm Morningstar.

Winklevoss also believes that the SEC’s refusal has led U.S. investors to move to “unlicensed and unregulated” offshore platforms, including FTX, which he called “one of the largest financial frauds in modern history.”

“Maybe the SEC will reflect on its dismal record and instead of overstepping its statutory power and trying to act like the gatekeeper of economic life, it will focus on fulfilling its mandate of investor protection,” he opined.

Winklevoss’ comments come as a flurry of companies has recently filed, renewed, or amended their filings for a spot Bitcoin ETF, including BlackRock, Fidelity, WisdomTree, Invesco, Valkyrie, and ARK Invest.

The SEC has reportedly said that some of the filings for spot ETFs are inadequate and not “sufficiently clear and comprehensive.” The regulator asked the fund managers to resubmit after clarifying their filings language.

Meanwhile, Gemini is in a protracted court mediation with Genesis, a subsidiary of Digital Currency Group (DCG), which owns Grayscale — the manager of the GBTC. The exchange is also in court on charges from the SEC.