According to Cameron Winklevoss, co-founder of Gemini, the U.S. securities regulator has compelled investors to enter into risky and unregulated cryptocurrency products for the past ten years. On July 2, Winklevoss criticized the U.S. Securities and Exchange Commission (SEC) for consistently denying approval of spot Bitcoin exchange-traded funds. He emphasized that it has been a decade since he and his brother first sought regulatory approval for their own ETF.
According to Winklevoss, the absence of an approved spot Bitcoin ETF has compelled U.S. investors to resort to “toxic products” such as the Grayscale Bitcoin Trust (GBTC). These products are known to have a significant disparity in trading value compared to the actual price of Bitcoin and impose exorbitant fees.
As per the date of YCharts, the Grayscale Bitcoin Trust (GBTC) is currently experiencing a 30% discount in its Net Asset Value (NAV) compared to the price of Bitcoin. Additionally, the GBTC annual fee is 2%, which is significantly higher than the average fee of 0.40% as reported in the latest study from financial services firm MorningStar conducted in July 2022.
YCharts reports that GBTC’s net asset value (NAV) discount is presently 30% lower than the price of Bitcoin, while MorningStar’s July 2022 study on financial services shows that GBTC imposes a 2% annual fee, which is significantly higher than the average of 0.40%.
According to Winklevoss, the SEC’s refusal to approve a spot Bitcoin ETF has resulted in U.S. investors using offshore platforms that are “unlicensed and unregulated”, such as FTX, which he claims is one of the biggest financial scams in modern history. Winklevoss suggested that the SEC should focus on investor protection, instead of trying to be the gatekeeper of economic life and reflect on its record.
Winklevoss commented on the recent surge in filings, renewals, and amendments by various companies for a spot Bitcoin ETF, such as BlackRock, Fidelity, WisdomTree, Invesco, Valkryie, and ARK Invest. However, the SEC has expressed concerns about the adequacy and clarity of some of these filings and has requested the fund managers to resubmit with better language.
Gemini, on the other hand, is involved in a lengthy court mediation with Genesis, a subsidiary of Digital Currency Group (DCG), which also owns Grayscale. Additionally, the exchange is currently facing SEC charges.
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