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Watchdog Group Warns SEC: Reject Spot Bitcoin ETFs or Face 'Financial Carnage'

Financial watchdog group Better Markets has called on the U.S. Securities and Exchange Commission (SEC) to reject spot bitcoin exchange-traded funds (ETFs), warning that they “will inflict massive investor harm.” The organization features U.S. Senator Elizabeth Warren’s testimonial on its website. Its president, who is reportedly close to SEC Chairman Gary Gensler, warned the securities regulator that it “must not facilitate the financial carnage that will follow.”

SEC Must ‘Follow the Law and Reject’ Spot Bitcoin ETFs

On Friday, Better Markets filed a supplemental comment letter with the U.S. Securities and Exchange Commission (SEC) detailing why the securities regulator should reject applications to launch spot bitcoin exchange-traded products (ETPs), which include bitcoin exchange-traded funds (ETFs).

Better Markets is a non-profit, non-partisan, independent organization based in Washington, D.C. It is dedicated to promoting the public interest in financial reform, financial markets, and the economy. Its letter to the SEC on Friday referenced multiple spot bitcoin ETFs, including those proposed by Blackrock, Vaneck, Ark Invest, Invesco, and Wisdomtree.

“The SEC must follow the law and reject spot bitcoin ETPs which will inflict massive investor harm,” Better Markets wrote. Dennis Kelleher, Better Markets’ cofounder, president, and CEO, issued a statement Friday:

The approval of spot bitcoin ETPs would be a historic mistake almost certainly leading to massive investor harm. The immense and unrelenting fraud and manipulation in the bitcoin market means that approving these products would expose millions of American investors and retirees to the very harms that the SEC exists to prevent.

“The SEC must not facilitate the financial carnage that will follow if the crypto industry is allowed to repackage, add a veneer of legitimacy to, and widely disseminate a financial product that is little more than a socially worthless gambling chip,” he warned. “Denying the proposed rule changes is required under the law.”

Several people on social media platform X quickly pointed out the connection between Better Markets, the anti-crypto U.S. Senator Elizabeth Warren (D-MA), and SEC Chairman Gary Gensler.

Warren is among the top testimonials featured on the Better Markets website. “Dennis Kelleher and his team at Better Markets have consistently pushed for financial reform that will help protect the U.S. economy from another financial crash,” the anti-crypto senator wrote.

As for Gensler, Fox Business journalist Eleanor Terrett detailed in a lengthy post on X Friday. “SEC Chairman Gary Gensler and the president and CEO of Better Markets Dennis Kelleher are tight (they served on Biden’s presidential transition team together) and Kelleher himself doesn’t like crypto AT ALL.” The Better Markets CEO previously said crypto has “no legitimate or socially useful purpose,” noting: “It’s worse than a fantasy, it’s a fraud on the public.”

While many in the crypto community found Better Markets’ arguments unconvincing, others expressed concerns that Gensler might seek a means to reject spot bitcoin ETF applications.