Gary DeWaal, special counsel and chair of the Financial Markets and Regulation practice group in New York, spoke with Reuters Legal News in a video interview following the debut of a new fund that tracks the future price of bitcoin.

ProShares Bitcoin Strategy ETF, the first US-based exchange-traded fund, launched to great fanfare and caution on October 19, 2021.

While the launch of the ETF has already shepherded in other similar investment products, Gary spoke about what he doesn't expect anytime soon: a fund that tracks the current price of spot cryptocurrencies.

SEC "Chairman [Gary] Gensler has indicated he is not so receptive to ETFs on spot bitcoin and the reason being because the exchanges [trading bitcoin] aren't sufficiently regulated themselves and don't have significant size as far as he's concerned. They're just not reliable sources of information," Gary explained.

Gary also doesn't expect to see ETFs based on futures on other cryptocurrencies such as Ether in the near future. The issue is ultimately the problematic overlapping and unclear regulation of cryptoassets in the United States.

"What needs to be done is that the chairman of the SEC and the acting chairman of the CFTC need to go into a room to figure out the jurisdiction; go to Congress, get that enacted; and then we can move forward," Gary said. 

"U.S. bitcoin ETF debuts but legal hurdles remain," Reuters Legal News, October 22, 2021