U.S. Senator Urges SEC Chairman Gary Gensler to Stop Approving Cryptocurrency ETFs Due to “Egregious Risk”

U.S. Democratic Senators Jack Reed and Laphonza Butler have urged U.S. Securities and Exchange Commission (SEC) Chairman Gary Gensler to halt further approval of cryptocurrency exchange-traded funds (ETFs). It’s putting pressure on you.

in letter In a March 11 note, the pair said cryptocurrency ETFs expose investors to “low-volume” markets that are vulnerable to fraud and manipulation. Retail investors “face tremendous risk” if they invest in these products because of the prices, the letter said.

🚨News: Rhode Island Senator @Senjak Reed and California Senator @senraponja wrote a letter to @GaryGensler We ask the agency to intervene to ensure that broker-dealers provide investors with adequate information about transactions. $BTC ETFs (they say they should be properly referenced… pic.twitter.com/xwlfu7kx3F

— Eleanor Terrett (@EleanorTerrett) March 14, 2024

The senators are calling on the SEC to “protect investors from fraud and abuse that may be enabled by the current light regulatory regime applicable to Bitcoin ETPs.”

Letter to SEC Vetoing Spot Ether ETF Application

Bloomberg ETF analyst Eric Balchunas said the letter struck a pessimistic tone about the likelihood of a spot Ether ETF being approved. Eight applications for these products are currently awaiting regulatory approval.

Bitcoin ETF’s blockbuster success is baffling high-ranking Democrats. Buyer’s remorse. This is one of the reasons why we are pessimistic about the chances of Eth ETF approval. https://t.co/SGEAkGQGyD

— Eric Balchunas (@EricBalchunas) March 14, 2024

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

Paul Grewal, Coinbase’s chief legal officer, defended the Ethereum ETF, saying the largest altcoins have deep and liquid spot markets. He said only two S&P 500 stocks have higher nominal dollar volume than Ethereum.

Honorable Senator, the evidence points to the exact opposite. We have discussed our analysis with SEC staff and would be happy to do the same for you and other policymakers who have questions. 1/7 https://t.co/juFj4QyDnj

– paulgrewal.eth (@iampaulgrewal) March 15, 2024

Grewal also noted that many other cryptocurrencies have shown metrics that outperform the largest traded stocks.

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