News Release: SEC Approval of Bitcoin Spot ETF Will Put More Investors at Risk


January 11, 2024

Carter Dougherty 

SEC Approval of Bitcoin Spot ETF Will Put More Investors at Risk

Washington, D.C. – The Securities and Exchange Commission’s (SEC) approval of cryptocurrency exchange-traded funds (ETFs) will reward bad actors in the crypto industry and amplify risks for investors, according to Americans for Financial Reform Education Fund.

“We are disappointed the SEC approved these filings despite endemic market manipulation and investor risks found in crypto-asset markets, which led to billions in consumer losses during the recent crash,” said Mark Hays, senior policy analyst with Americans for Financial Reform Education Fund. “This step will expose a much larger group of investors to that same risk. And, this approval provides the crypto industry with an imprimatur of legitimacy that it has craved but not earned.” 

To speak with Mark Hays, please email

The firms submitting these petitions for Bitcoin spot ETFs claim that the systems they have established to issue these products comply with the SEC’s standards and will effectively reduce potential risks for investors. However, the conditions that make the market for Bitcoin ripe for manipulation and fraud remain:

  1. Bitcoin ownership continues to be highly concentrated, with a small number of crypto wallets holding a large majority of Bitcoins minted;
  2. Control of the mining pools that verify Bitcoin transactions and mint new coins is also highly concentrated;
  3. A handful of programmers reportedly maintain the administration of the underlying Bitcoin blockchain.

Multiple studies have suggested that wash-trading accounts for most trades found on many major crypto exchanges – activity that can distort prices and mask illicit activity, and even foster market instability.  Offering a new avenue such as these ETFs that enable crypto-related products to be included in investors’ portfolios will likely amplify these risks. 

“At a minimum now, the SEC and other regulators should provide investors, consumers and other financial sector players with more information about the unique risks and harms present in crypto markets,” said Hays. “They should also proactively use the tools they have available to address the industry’s record of systemic noncompliance with basic consumer and investor protection regulatory standards.”