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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.
🚨NEW: Rhode Island Senator @SenJackReed and California Senator @Senlaphonza have penned a letter to @GaryGensler asking for the agency to step in to ensure broker-dealers are giving investors the proper disclosures around the $BTC ETFs (which they say should be properly referred… pic.twitter.com/xwlfu7kx3F
— Eleanor Terrett (@EleanorTerrett) March 14, 2024
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.
The blockbuster success of the Bitcoin ETF is upsetting to high ranking Dems. Buyer’s remorse. This is part of why we are pessimistic re spot Eth etf approval chances. https://t.co/SGEAkGQGyD
— Eric Balchunas (@EricBalchunas) March 14, 2024
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.
Respectfully Senators, the evidence points exactly the opposite way. We have discussed our analysis with SEC staff and would be happy to do the same for you and any other policy makers who have questions. 1/7 https://t.co/juFj4QyDnj
— paulgrewal.eth (@iampaulgrewal) March 15, 2024
Grewal also noted that many other cryptocurrencies have demonstrated metrics that surpass many of the largest traded equities.
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