SEC receives recommendations from US Government Accountability Office following approval of Bitcoin ETF
The Securities and Exchange Commission’s (SEC) specialized unit for emerging technologies in the United States is facing challenges that it is not fully prepared to meet, according to a report from the US Government Accountability Office (GAO) on December 15. In response, the GAO proposed three primary action plans to the SEC after approving 11 spot Bitcoin exchange-traded funds (ETFs) on January 10. The recommended strategies focused on managing the digital asset market workforce and guiding the regulator’s approach to the growing industry in the coming years.
The report highlighted that although the SEC has 116 staff members working on crypto-related issues, it has not updated its workforce planning strategy since 2019. To address this, the GAO suggested the development of a new strategy in line with the agency’s 2022-2026 strategic and performance plans.
Another finding of the report was that the SEC’s FinHub, responsible for overseeing emerging technologies, lacks documented policies, procedures, and performance targets. While FinHub engages in activities such as meetings with market participants, it has not established formal policies and procedures for internal controls.
In response to these findings, the GAO recommended three key actions. First, the SEC chief should instruct the chief Human Capital officer to prepare a new workforce planning strategy. Second, the FinHub Director should document policies and procedures to support internal controls. And third, the SEC chair should ensure the development of objective, measurable, and targeted performance goals and metrics for FinHub. The progress of these recommendations will be monitored through a live status section.
The SEC’s approval of the spot Bitcoin ETFs represents a significant change in its position after years of rejections. An internal document from the SEC revealed that the approval was supported by three out of four votes, with SEC chief Gary Gensler casting the deciding vote.
Bitcoin skeptic and gold enthusiast Peter Schiff suggested that Gensler was forced to approve the spot Bitcoin ETF and warned that stringent cryptocurrency regulations implemented by Gensler could increase Bitcoin transaction costs and weaken its practicality, potentially leading to a significant drop in value.
Despite these concerns, spot Bitcoin ETFs experienced a remarkable trading volume of $1.8 billion on January 16, surpassing the combined volume of all 500 ETFs launched in 2023 by more than three times.
Looking ahead, the cryptocurrency market is eagerly anticipating the Bitcoin halving in April and the potential inflows into BTC-related traditional finance (TradFi) investment vehicles. While financial institutions like JP Morgan predict a gradual increase in capital interest, crypto-native entities like Mike Novogratz’s Galaxy Digital expect significant price surges of up to 74%.
Predictions of up to $100 billion flowing into BTC markets in the first year are being made, although Bloomberg’s James Seyffart estimates a more modest inflow of $10 to $15 billion. He suggests that this capital could come from new investments in Bitcoin and shifts from other sources such as Canadian ETFs, crypto mining ventures, and futures-based financial products.
The projected figures could vary based on factors like the upcoming 2024 US presidential elections and political changes in approximately 50 other countries.
Attention may now shift to Ethereum (ETH), which has its own ETF frenzy and upcoming technological upgrades.
