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Pompliano on the U.S. SEC and its Approach to Crypto Regulation, Spot Bitcoin ETFs, and Bitcoin

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Pompliano On The U.s. Sec And Its Approach To Crypto Regulation, Spot Bitcoin Etfs, And Bitcoin

On September 1, 2023, Anthony Pompliano, the founder and partner of Pomp Investments, appeared on CNBC’s “Squawk Box” to discuss various topics, including the recent Court of Appeals ruling in favor of Grayscale Invetsments and the Securities and Exchange Commission’s (SEC) delay in making a decision on spot Bitcoin ETF applications.

Pompliano wasn’t surprised by the SEC’s decision to delay its ruling on spot Bitcoin ETFs for another 45 days. He emphasized that the SEC’s loss in a recent lawsuit doesn’t mean they have to approve the ETFs; rather, they need to reconsider their decision based on other factors. Pompliano believes it’s not a matter of if but when spot Bitcoin ETFs will be approved. He also mentioned that the delay could coincide with a potential supply shock in Bitcoin, similar to what happened in 2020, which could significantly drive up the price.

When asked about the market’s reaction to the Court of Appeals ruling in favor of Grayscale, Pompliano noted that the initial gains were wiped out quickly. He attributed this to the market’s seasonality and said that those who follow the crypto space closely were not surprised by the price action. He also mentioned that the market is currently experiencing a shift in participants, with Wall Street and retail investors becoming more involved.

Pompliano acknowledged the challenging role that the SEC has in balancing innovation and investor protection. He stated that Bitcoin has passed the regulatory threshold and is treated as an asset, not a commodity, by the SEC. He also noted that there’s a lot of debate and disagreement between the crypto community and regulators, but ultimately, the courts will decide the outcome.

Pompliano expressed a more sympathetic view towards SEC Chairman Gary Gensler than some in the crypto community. He emphasized the importance of education and dialogue over confrontation, stating that both sides need to work together for progress to be made.

Discussing the potential impact of a spot Bitcoin ETF on platforms like Coinbase, Pompliano, an investor in Coinbase, said that such an ETF would likely attract large institutions rather than retail investors:

“If you’re a retail investor and you want exposure to Bitcoin over the last two, three, five years, you probably figured out a way to do it. So I don’t think there’s a ton of inflows [coming] from retail investors. I do think though that sovereign wealth funds or very large institutions, they’re not going on Coinbase and buying spot Bitcoin. I think that’s where the ETF inflows could happen.” 

Pompliano addressed questions about Bitcoin’s real-world use case, stating that it BTC is primarily used as a store of value. He mentioned that while some people want Bitcoin to function as electronic cash, its primary use currently is to protect purchasing power. He also noted that the situation varies by country; for example, people in Argentina are more interested in stablecoins than Bitcoin because they want/need to transact in digital dollars (i.e., dollar-backed stablecoins) rather than pesos (due to their high inflation rates).

Featured Image Via Midjourney

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