As BlackRock, ARK 21Shares, and VanEck prepare to bow out by submitting amended S-1 forms – and with rising positive market reaction the cryptocurrency industry is getting as a result of the most expected SEC approval, the Securities and Exchange Commission (SEC) Chair Gary Gensler has, on his official X handle, made a thread issuing important warnings that could cloud the impending decision on Bitcoin Exchange-Traded Funds (ETFs).

The deadline for the SEC’s response to the ETF applications from prominent figures in the industry, like Cathie Wood’s ARK Investment and 21Shares, is approaching, heightening the suspense and speculation surrounding the regulatory fate of these financial instruments. 

The SEC chair warned about illegal cryptocurrency firms operating outside the stipulated cryptocurrency laws. He said the implication of this will be the total vulnerability of an average investor. Gensler’s warnings cut across the risks often encountered in the cryptocurrency industry and the need for strong regulation.

Gansler Advocates Strong Investor Protection Laws, Speaks on Liquidity Issues

Strong investor protection laws are desperately needed, as the SEC Chair has repeatedly stated, and market manipulation is still a significant concern when assessing Bitcoin exchange-traded funds (ETFs).

The SEC’s dedication to maintaining fair and transparent markets is highlighted by Gensler’s caution, especially about cutting-edge financial products associated with digital assets. Gensler’s second cautionary note centers on the liquidity concerns related to Bitcoin and other cryptocurrencies.

He said that because of their notorious volatility, cryptocurrency markets present particular difficulties with liquidity. Issuers and investors are prompted by this caution to contemplate the possible influence of market dynamics on the liquidity of Bitcoin ETFs.

Gensler Speaks on Custody Agreement, Says SEC’s Advice Very Important 

Gensler advised that because they are digital assets, cryptocurrencies need secure custody options to guard against loss and unwanted access. He said that the SEC cares about making sure that sufficient protections are in place to protect investors from any dangers related to the storage and administration of digital assets.

The uncertainty surrounding the regulatory environment for Bitcoin ETFs is heightened by the deadline for the SEC to reply to the ETF applications and Gensler’s cautions. In Gensler’s post, he declared that the industry still has a long way to go in making cryptocurrency a widely accepted global digital currency.

Gensler Speaks on Invasion of the Cryptocurrency Industry by Fraudsters

The SEC chairman added that if the cryptocurrency sector has grown, regulators are still facing new and challenging issues, especially about innovative financial products such as Bitcoin ETFs. While speaking on the fraudsters augmenting project, Gensler stated that fraudsters are effortlessly taking advantage of the growing popularity of cryptocurrency assets to attract investors into the sham.

He confessed that the cryptocurrency industry is filled with scammers who have not normalized their project promotion, only to disappear afterward the investor’s funds. Speaking on the latest development, Time Tabloid’s Adedoyin Aka had on the platform wrote that Gensler’s last mutations before a possible ETF launch serve as a reminder that regulatory oversight is still essential to making bitcoin investment products accessible to a larger market.

Adedoyin added that as the SEC makes choices that impact institutional and individual investors that are eager to participate in the digital assets, the next chapter in the Bitcoin ETF narrative will come to life.