SEC Chair Offers Controversial Advice to Crypto Investors Ahead of ETF Approval

As the crypto industry eagerly awaits any news from the regulator regarding the various applications for spot Bitcoin exchange-traded fund (ETF), Gary Gensler, the chairman of the United States Securities and Exchange Commission, recently took to the social media platform X (formerly Twitter) to offer advice to crypto investors. 

Appointed into office in April 2021 by President Joe Biden, Gensler has not been particularly responsive to cryptocurrency. In fact, under his leadership, a long list of crypto firms like Binance and Coinbase have been cracked down.  

The agency’s enforcement approach led many to say that the SEC is pushing for regulations instead of innovation. Last year, US Congressman Warren Davidson accused Gensler of being a “tyrannical chairman” and therefore filed a bill to fire him.

Gensler Offers Advice to Crypto Investors

In a thread, Gensler offered three key tips that investors should keep in mind if they are to venture into crypto assets. He started by emphasizing that certain entities offering crypto asset investments and services may not be complying with applicable laws, including federal securities rules. 

As a result, investors in crypto asset securities may be deprived of important information and other necessary protections related to their investment. Therefore, investors need to ensure that the entities they are investing with are compliant with all relevant laws and regulations.

Gensler also mentioned how exceptionally risky and volatile crypto assets are pointing out that several major platforms and assets have lost value in recent times. Therefore, investors should bear in mind the risk involved in cryptocurrency and should only invest the amount they can afford to lose.

Furthermore, the SEC chairman reminded investors how prevalent fraud incidents are in the crypto scene, saying:

“Fraudsters continue to exploit the rising popularity of crypto assets to lure retail investors into scams. These investments continue to be replete with fraud- bogus coin offerings, Ponzi & pyramid schemes, & outright theft where a project promoter disappears with investors’ money”.

Potential ETF Approval?

While Gensler did not mention anything about the proposed ETFs in his post, the timing of this advice leaves many speculating if it signals a positive approval of the spot bitcoin ETF applications.

Additionally, spot bitcoin ETF issuers that have submitted their amended S-1 filings with the SEC by the deadline. The agency is expected to decide on the applications by Wednesday.