Two United States senators need Gary Gensler to drag the pin on any additional crypto exchange-traded funds (ETFs), citing “monumental dangers” to retail traders.
In a March 11 letter, Democrat senators Jack Reed and Laphonza Butler claimed that permitting any additional approvals of crypto ETFs by the Securities and Change Fee would see traders uncovered to “thinly traded” markets rife with fraud and manipulation.
There are eight proposed spot Ether ETF purposes awaiting approval by the SEC, and there have been hopes that different altcoins might ultimately stroll the identical path.
“Retail traders would face monumental dangers from ETPs referencing thinly traded cryptocurrencies or cryptocurrencies whose costs are particularly inclined to pump-and-dump or different fraudulent schemes,” learn the letter.
Reed and Butler additionally urged the SEC to not enable the latest approval of spot Bitcoin (BTC) ETFs to turn into a precedent for additional approvals.
They claimed that whereas the marketplace for Bitcoin had displayed “severe weak point,” it was extra established and well-scrutinized than the marketplace for some other smaller cryptocurrencies.
“Nevertheless weak Bitcoin could also be to fraud and manipulation, markets for different cryptocurrencies are way more uncovered to misconduct.”
The senators additionally urged the SEC to take “a number of particular steps” with the already launched Bitcoin ETF merchandise, requesting that BTC ETF brokers and advisors be subjected to additional regulatory scrutiny.
Alexander Grieve, the federal government relations lead at crypto enterprise capital agency Paradigm urged the success of spot Bitcoin ETFs had been “clearly ruffling some feathers” on Capitol Hill.
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Crypto business pundits say the letter is proof of mounting political strain on Gensler — which makes an Ether ETF approval in Could seem much less probably.
“The blockbuster success of the Bitcoin ETF is upsetting to high-ranking Dems. Purchaser’s regret. That is a part of why we’re pessimistic re spot Eth etf approval probabilities,” mentioned Balchunas in a March 15 X publish.
On March 11, Balchunas mentioned the probability of a spot Ether ETF approval by Could was sitting at simply 35%. In January, Blachunas pegged the chances of approval at 70% however informed Cointelegraph the SEC’s “radio silence” to potential fund issuers — amongst a number of different components — was a nasty signal.
Each Butler and Reed have been concerned in a number of items of laws that search to crack down on cryptocurrency in the USA.
On Dec. 11 final 12 months, Butler joined Senator Elizabeth Warren’s controversial Digital Asset Anti-Cash Laundering Act invoice as a co-sponsor. In July, Reed sponsored a bipartisan invoice that may tighten Know Your Buyer (KYC) and Anti-Cash Laundering (AML) rules and sanctions necessities for decentralized finance (DeFi).
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