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Former SEC Official Warns Spot Bitcoin ETFs Will Create 'Wall Street Fee-Sucking Scam of Epic Proportions'

The U.S. Securities and Exchange Commission’s former head of internet enforcement has warned that spot bitcoin exchange-traded funds (ETFs) “will create yet another Wall Street fee-sucking investor scam of epic proportions.” In addition, he stressed that it will likely be the most centralized crypto contraption conceivable.

Ex-SEC Official’s Spot Bitcoin ETF Warnings

Former U.S. Securities and Exchange Commission (SEC) official John Reed Stark issued some warnings about spot bitcoin exchange-traded funds (ETFs) in a post on social media platform X Monday. Stark is currently president of cybersecurity firm John Reed Stark Consulting. He founded and served as chief of the SEC Office of Internet Enforcement for 11 years. He was also an SEC enforcement attorney for 15 years.

Expressing his skepticism about spot bitcoin ETFs, Stark wrote: “As to whether the approval of a spot bitcoin ETF is a good thing, my view is that it is not.” He cautioned:

The very idea of a bitcoin spot ETF remains a laughable concept, not only because it will create yet another Wall Street fee-sucking investor scam of epic proportions, but also because a bitcoin spot ETF is perhaps the most ‘centralized’ crypto contraption conceivable.

The SEC is currently reviewing 13 applications for spot bitcoin ETFs. The regulator reportedly met with several applicants last week and gave them until the end of the week to file amendments to their spot bitcoin ETF filings. Moreover, the regulator also asked them to use the cash-creation method, instead of the in-kind creation method. Blackrock, the world’s largest asset manager, originally pushed for the in-kind model, and even proposed a revised in-kind method. However, the firm failed to convince the SEC and has now adopted the cash method as detailed in its latest filing.

Citing reports of multiple meetings between SEC officials and spot bitcoin ETF issuers, in addition to discussions regarding the cash creation method, Stark said last week that based on his 20 years of experience, “the SEC’s approval of some iteration of some kind of bitcoin spot ETF seems likely.” The former SEC internet enforcement chief opined:

I just can’t seem to get over the notion that the approval of a bitcoin spot ETF may actually become a primary talking point of SEC Chair Gary Gensler legacy. Like most of the cryptoverse, this just seems upside down. Say it ain’t so Gary.

What do you think about the statements by former SEC internet enforcement chief John Reed Stark? Let us know in the comments section below.

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