The Ruling
September 28, 2017, delivered a stark assessment from one of the most respected voices in American financial regulation. Arthur Levitt, who served as chairman of the U.S. Securities and Exchange Commission from 1993 to 2001, told Reuters in New York that he believed the agency he once led was fundamentally ill-equipped to deal with bitcoin. The digital currency, which had surged from below $1,000 at the start of the year to above $4,100 by late September, posed regulatory challenges that the SEC’s existing framework was not designed to address.
Levitt’s candid admission carried weight precisely because of his credentials. As the longest-serving SEC chairman in history, his tenure spanned the dot-com boom and its aftermath, giving him deep experience with emerging asset classes that outpace regulatory infrastructure. His concern was not about whether bitcoin deserved regulation — he implied it did — but whether the SEC possessed the technical expertise and statutory authority to provide it effectively.
International Precedents
Levitt’s remarks landed on a day when the global regulatory landscape was shifting rapidly. In South Korea, the Financial Services Commission banned all forms of initial coin offerings, following China’s comprehensive September 4 prohibition on token sales and subsequent shutdown of domestic bitcoin exchanges. The European Central Bank’s Vice President added to the chorus of institutional skepticism, comparing bitcoin to the tulip bulbs that fueled the 17th-century Dutch speculative bubble and dismissing it as a mere instrument of speculation rather than a legitimate currency.
The pattern was unmistakable: regulators across three continents were simultaneously grappling with how to classify, oversee, and potentially restrain a technology that defied traditional financial categories. Each jurisdiction arrived at different conclusions — China chose prohibition, South Korea targeted fundraising, the ECB offered public criticism, and the United States continued its case-by-case approach — but all shared a common thread of institutional unease.
Enforcement Reality
Against this backdrop, the SEC’s practical challenges were on full display. On the same day Levitt spoke, two significant ETF-related developments exposed the gap between Wall Street’s enthusiasm for crypto products and the regulatory machinery needed to approve them.
ProShares, a major ETF provider with approximately $29 billion in assets under management, filed with the SEC for two new products: the ProShares Bitcoin ETF and the ProShares Short Bitcoin ETF. Both funds planned to track bitcoin futures contracts traded on the Chicago Board Options Exchange and list on NYSE Arca. ProShares, known for its specialized long and short funds, appeared to be positioning itself at the frontier of crypto-based exchange-traded products.
Simultaneously, VanEck — the ninth-largest ETF company — withdrew its own bitcoin ETF application after SEC staff told the firm during a September 20 call that the commission would not review registration statements for funds whose underlying instruments were not yet available. Since the CBOE’s bitcoin futures product had not yet launched — it was still pending review by the Commodity Futures Trading Commission with a target of the fourth quarter or early 2018 — VanEck had no choice but to pull its filing.
The contradictory signals were striking. One major ETF provider filed new applications while another withdrew existing ones, all because the underlying futures market that would give the SEC a familiar regulatory entry point did not yet exist. Bitcoin traded around $4,175 that day, according to CoinMarketCap data, with a total market capitalization near $68 billion — a scale that demanded institutional-grade products but sat in a regulatory no-man’s-land.
Market Shockwaves
The U.S. Commodity Futures Trading Commission also made its presence felt on September 28, filing civil fraud charges against a New York man and his company over an alleged bitcoin investment scheme. The enforcement action served as a reminder that while regulators struggled to build proactive frameworks, they retained the ability to pursue bad actors through existing anti-fraud statutes.
Meanwhile, the institutional dance around bitcoin grew more complex. JPMorgan Chase, whose CEO Jamie Dimon had famously called bitcoin a fraud, was simultaneously routing customer orders for bitcoin-related instruments through its brokerage operations. The contradiction between public posturing and private market participation underscored the tension that Wall Street faced as client demand for crypto exposure clashed with executive skepticism.
Bitcoin’s price held relatively firm near $4,100 despite the flood of regulatory news, suggesting that markets had begun to differentiate between enforcement actions targeting fraud and structural regulatory development that could ultimately benefit the asset class. Ethereum traded at approximately $282, with the broader crypto market capitalization exceeding $130 billion.
Closing Thoughts
September 28, 2017, crystallized the central tension of cryptocurrency regulation: the technology moved faster than the institutions tasked with overseeing it. Levitt’s honest assessment that the SEC lacked the tools for bitcoin oversight, combined with the ProShares filing and VanEck withdrawal, revealed a regulatory apparatus caught between demand and capability. The CFTC’s fraud charges showed that enforcement was possible even without a comprehensive framework, but the industry’s long-term path to legitimacy clearly required the kind of institutional infrastructure — futures markets, regulated exchanges, clear classification — that was still months away from materializing.
Disclaimer
This article is for informational purposes only and does not constitute financial or investment advice. Cryptocurrency investments carry significant risk. Always conduct your own research before making investment decisions.
Levitt in 1997 saying the SEC wasnt ready for internet stocks and then in 2017 saying they werent ready for crypto. pattern recognition says the agency is always 10 years behind the curve
gensler_archivist the SEC being 10 years behind every financial innovation is not a bug its a feature. they regulate the last cycle every single time
proshares filing for a bitcoin ETF in 2017 was so ahead of its time. took 4 more years for any spot ETF to get approved
4 years for a futures ETF and another 3 for spot. the SEC moved at the speed of bureaucracy while the market ran circles around them
Sofia Mendez 4 years for a futures ETF and 3 more for spot. at that pace the SEC is basically a speed bump not a regulator
ProShares filing for a dual ETF in 2017 when BTC was barely above $4k was genuinely visionary. most people thought it was a publicity stunt
proshares dual ETF at btc 4k was either insane or genius. turned out to be 8 years early
BTC at 4100 when this interview happened. proshares filing for a dual ETF at that price was either visionary or completely insane. turned out to be 8 years early
Pernille V. insane or genius with hindsight bias. at 4k BTC most people thought proshares was trolling the SEC. turned out they were 8 years early
ProShares filed for a dual BTC and ETH ETF when BTC was at 4k. thats not genius, thats throwing darts at a board and getting lucky 8 years later
proshares in 2017 was visionary or desperate depending on who you ask. the timing with BTC at 4k was either perfect or lucky. either way it forced the conversation
proshares filing at btc 4k was either genius or desperate, rulebook_empty nailed that take
ProShares filing at BTC 4100 was laughable to most people in 2017. turns out they were just 7 years early
Levitt saying the SEC was ill-equipped to regulate bitcoin in 2017 and here we are in 2026 still waiting for clear rules. Not much has changed.
levitt in 2017: sec is ill-equipped. sec in 2026: still suing people via enforcement actions instead of writing rules. bro called it
Levitt ran the SEC from 93 to 01, survived the dotcom bubble, and still said the agency wasnt ready for crypto. 9 years later the SEC is still doing enforcement by litigation instead of rulemaking
levitt basically predicted the entire 2024-2026 enforcement era in one quote. dude ran the sec through dotcom and still said crypto broke his brain
Levitt was right though. The SEC still struggles with crypto oversight. His assessment was honest and rare for a former regulator.
still waiting on real crypto infrastructure 9 years later, levitt called the sec gaps back in 2017
Filip is right. 9 years later and the SEC is still suing projects instead of writing rules. Levitt saw this coming from a mile away
the dual ETF filing including ETH is the part everyone forgets. ETH wasnt even on the SEC radar as a security yet and proshares already wanted a paired product
Levitt in 2017 said the SEC lacked technical expertise for crypto. 9 years later they still sue instead of legislating. he was right