Senator Elizabeth Warren asserted on Jan. 11 that U.S. securities regulators incorrectly decided to approve spot Bitcoin ETFs.

Warren wrote in a post on X:

“The [Securities and Exchange Commission] is wrong on the law and wrong on the policy with respect to the Bitcoin ETF decision. If the SEC is going to let crypto burrow even deeper into our financial system, then it’s more urgent than ever that crypto follow basic anti-money laundering rules.”

Warren’s precise complaints are unknown, and whether she will explain those issues in full in a future letter to the SEC is unclear.

However, the final part of her statement appears to advocate for anti-money laundering rules that would extend beyond exchange-traded funds specifically. Warren has been advancing legislation called the Digital Asset Anti-Money Laundering Act since its reintroduction in July 2023. The contents of that bill would apply to the cryptocurrency industry in general.

Some members of the SEC appear to be sympathetic to Warren’s war on crypto crime. Despite voting to approve spot Bitcoin ETFs, SEC chair Gary Gensler noted crypto abuses, including crime and terrorism in his approval statement and urged users to be “cautious about the myriad risks” around Bitcoin.

Dissenting SEC commissioner Caroline A. Crenshaw more harshly stated that Bitcoin markets are “marred by fraud and manipulation” and lack of oversight.

Law does not require SEC to approve or reject ETFs

Warren’s criticism of ETFs received massive backlash on social media. Many commenters suggested that a ruling concerning Grayscale‘s ETF application ultimately led the SEC to approve various spot Bitcoin ETFs. That ruling initially seems to counter Warren’s suggestion that the SEC was “wrong on the law.”

However, the outcome of the Grayscale case did not require the SEC to approve any fund. Gensler acknowledged that the outcome of Grayscale’s legal case was one factor that made approval of spot Bitcoin ETFs the “most sustainable path forward” but did not state that the SEC was required to issue approvals.

Grayscale’s ruling required the SEC to review its spot Bitcoin ETF application. The court also found that the SEC had failed to explain its reasoning for rejecting the application in light of previous Bitcoin futures ETF approvals.