Cathie Wood Slams SEC Chair Gary Gensler for Denigrating Crypto After Bitcoin ETF Approval

The CEO of Ark Invest criticized Gensler’s statement that the agency does not endorse digital assets

Cathie Wood, the founder and CEO of Ark Invest, has expressed her disappointment at the statement made by Gary Gensler, the chair of the Securities and Exchange Commission (SEC), shortly after the agency approved a dozen exchange-traded funds (ETFs) that directly hold Bitcoin.

In an interview with Bloomberg Radio, Wood said that Gensler’s comments were “par for the course in disruptive innovation” and that he “just denigrated the whole crypto space. I couldn’t believe it.”

Wood said that there is a significant level of curiosity among many individuals regarding cryptocurrencies and that she was optimistic about Ark becoming one of the top providers through the Bitcoin ETF.

However, she also acknowledged that institutions will need to navigate the new regulatory framework with caution due to the SEC’s initial hesitancy. She emphasized the importance of thorough diligence in this evolving landscape.

What are spot Bitcoin ETFs?

Spot Bitcoin ETFs are funds that track the price of Bitcoin and allow investors to buy and sell shares on an exchange like any other stock. Unlike futures or options contracts, spot Bitcoin ETFs do not involve leverage or derivatives and are backed by actual Bitcoin held in custody.

The SEC has been reluctant to approve spot Bitcoin ETFs for over a decade, citing concerns over market manipulation, investor protection, custody issues, and lack of clear rules for crypto-related products.

However, on Wednesday, January 11, 2024, the SEC announced that it has approved rule changes allowing the creation of 11 spot Bitcoin ETFs in the United States. The decision was made by a 3-2 vote by SEC commissioners, including Gensler.

The approval marks a notable shift in the SEC’s stance on spot Bitcoin ETFs and could have far-reaching implications for the crypto industry. It could also transform Grayscale’s popular Bitcoin Trust into an ETF, as well as enable major issuers like BlackRock’s iShares and Fidelity to launch their own competing funds.

Why did Gensler say what he said?

Gensler issued a statement shortly after the SEC approved spot Bitcoin ETFs, saying that while he approved “the listing and trading of certain spot Bitcoin ETP shares today”, he did not approve or endorse Bitcoin.

He also advised investors to remain cautious about “the myriad risks associated with Bitcoin and products whose value is tied to crypto”.

Gensler has been vocal about his skepticism towards cryptocurrencies in general and has warned about their potential for fraud, volatility, environmental impact, and systemic risk. He has also advocated for more regulation and oversight of crypto-related activities.

In his statement, Gensler reiterated some of these concerns and said that he expects more innovation in this space from existing firms rather than new entrants. He also said that he supports research on crypto assets but does not see them as suitable for retail investors at this time.

How did Wood react?

Wood reacted strongly to Gensler’s statement on Bloomberg Radio, saying that he “just denigrated” her company Ark Invest along with “the whole crypto space”.

She said that this is typical of how disruptive innovations face resistance from incumbents who fear losing their market share or power.

She also said that there are many people who are curious about cryptocurrencies out there and that she believes Ark will be able to provide them with exposure to this emerging asset class through its joint application with 21Shares.

She added that she thinks this is a new chapter for Bitcoin and that she hopes Ark will be one of the top providers through its spot Bitcoin ETF.

However, she also acknowledged that institutions will need to work through this new framework with more diligence due to Gensler’s initial trepidation. She emphasized the importance of thorough diligence in this evolving landscape.