US Senators Urge SEC to Scrutinize Crypto ETFs Amid Investor Fraud Concerns
Summary:
US Democratic Senators Jack Reed and Laphonza Butler have expressed concerns over additional cryptocurrency Exchange-Traded Funds (ETFs), highlighting them as potential threats to retail investors. They urged the Securities and Exchange Commission (SEC) to scrutinize Bitcoin ETFs more closely, citing increased susceptibility to fraud and manipulation. Crypto industry insiders view the senator's letter as an indication of growing political pressure, suggesting that the approval of an Ether ETF in May might be uncertain.
Senators Jack Reed and Laphonza Butler from the United States have expressed their concern over any additional cryptocurrency exchange-traded funds (ETFs), identifying them as big threats to individual investors. In a letter dated March 11, the Democratic senators conveyed their skepticism about permitting more crypto ETF approvals by the Securities and Exchange Commission, warning that this could leave investors vulnerable to fraud and manipulation in markets characterized by sparse trading. Currently, the SEC has eight potential Ether ETF applications in the pipeline, igniting anticipation for further altcoin ETFs.
According to the senators, retail investors will face significant hazards with ETPs associated with thinly traded cryptocurrencies or those especially prone to fraudulent tactics. They particularly appealed for intensified supervision of Bitcoin ETFs.
Reed and Butler also cautioned the SEC against letting the recent sanction for spot Bitcoin (BTC) ETFs justify future approvals. They acknowledged that Bitcoin's market may demonstrate certain fragility but maintained that it is more mature and thoroughly assessed than the markets for any lesser-known cryptocurrencies. In their view, while Bitcoin may be open to fraudulent manipulations, markets for other cryptocurrencies are exceedingly more susceptible.
They further called on the SEC to implement several distinct measures concerning the already introduced Bitcoin ETF products, pushing for increased regulatory oversight for BTC ETF brokers and advisors.
Alexander Grieve, the head of government relations at crypto venture capital firm Paradigm, implied that the success of Bitcoin ETFs is visibly unsettling some individuals in Congress.
Crypto business insiders view this letter as a sign of growing political pressure on Gary Gensler, suggesting that the approval of Ether ETF in May might be in doubt.
On a related note, Reed and Butler have partaken in numerous legislative activities targeting cryptocurrency regulation in the U.S. Butler supported Senator Elizabeth Warren's disputed Digital Asset Anti-Money Laundering Act bill as a co-sponsor last December, while Reed sponsored a bipartisan bill aimed at enhancing Know Your Customer (KYC) and Anti-Money Laundering (AML) rules and penalties for decentralized finance (DeFi) last July.
Published At
3/15/2024 4:02:51 AM
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