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US Senators Urge SEC Chair Gary Gensler To Halt Crypto ETF Approvals Over “Enormous Risks”

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SEC Chair Gary Gensler
SEC Chair Gary Gensler

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US Democrat Senators Jack Reed and Laphonza Butler are pressuring the US Securities and Exchange Commission (SEC) chair Gary Gensler to halt any further approvals of crypto exchange-traded funds (ETFs).

In a letter dated March 11, the duo said crypto ETFs expose investors to “thinly traded” markets prone to fraud and manipulation. Retail investors “face enormous risks” by investing in these products because of their prices, the letter said.

The senators are urging the SEC to “protect investors from fraud and abuse, which may be enabled by the current light-touch regulatory regime applicable to Bitcoin ETP.”

Letter To SEC Casts A Pall Over Spot Ether ETF Applications

The letter casts an air of pessimism over the potential approval of spot Ether ETFs, said Bloomberg ETF analyst Eric Balchunas. Eight applications for such products are currently awaiting regulatory approval.

Reed and Butler said that while Bitcoin has its weaknesses, it was more established and scrutinized than other cryptocurrencies. They urged the SEC to refrain from allowing more crypto assets into the US ETF market.

The Chief Legal Officer for Coinbase, Paul Grewal, defended Ether ETFs, saying the largest altcoin has a deep and liquid spot market. Only two S&P 500 stocks have a higher notional dollar trading volume than Ether, he said.

Grewal also noted that many other cryptocurrencies have demonstrated metrics that surpass many of the largest traded equities.

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