Securities and Exchange Commission Chair Gary Gensler is a well-known critic of the crypto industry, often warning investors that the asset class is rife with fraud.

But the top Wall Street regulator, who’s seen as crypto’s no. 1 enemy, made a rare capitulation when he became the determining vote in a split decision Wednesday to approve almost a dozen spot Bitcoin exchange-traded funds — a product that he and his predecessor had rejected more than 20 times.

His decision, which allowed companies including BlackRock Inc. and Fidelity to launch products Thursday, didn’t seem to be one made with much conviction. Gensler used a significant portion of his statement on the approvals to discuss crypto’s lack of compliance and to stress that the decision on the ETFs didn’t mean the SEC had given the entire industry its blessing.

“It should in no way signal the commission’s willingness to approve listing standards for crypto asset securities,” he said. “Nor does the approval signal anything about the commission’s views as to the status of other crypto assets under the federal securities laws or about the current state of non-compliance of certain crypto asset market participants with the federal securities laws.”

The SEC declined to comment beyond the Wednesday statement.

The lead-up to the SEC’s decision was marked by one headache after another. Late Tuesday, someone hacked the agency’s official account on the social media platform X to circulate a fake post claiming the regulator had approved the products a day early. Then on Wednesday, the approval order for the Bitcoin ETFs briefly appeared on an SEC webpage before being taken down and then re-posted several minutes later.

In the end, Gensler, a Democrat, reluctantly voted with the SEC’s two Republican commissioners to green-light the products. The other two Democrats on the commission voted against the Bitcoin ETFs. 

Before Wednesday’s decision, the SEC had denied every application for an ETF directly tracking Bitcoin, despite approving products backed by Bitcoin futures in 2021. The regulator cited concerns that the underlying market was more susceptible to fraud and manipulation.

But the tides shifted after an August ruling in which a federal court sided with crypto asset manager Grayscale Investments. Grayscale had sued the SEC, arguing that its decision to deny the firm’s spot ETF was arbitrary and capricious because of the regulator’s prior approval of the Bitcoin futures products.

Gensler pointed to the Grayscale decision as a determining factor for approving the latest round of filings, saying circumstances changed after that ruling. However, he described the approval as applying to a very narrow class of investment products and said it doesn’t change how the SEC views the rest of the industry.

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