Two U.S. senators called on the Securities and Exchange Commission (SEC) to stop reviewing applications to issue exchange-traded funds based on any crypto and reject those already filed, including applications for spot Ethereum ETFs.
Jack Reed and Laphonza Butler, Democrats from the states of Rhode Island and California, sent a formal letter to Gary Gensler, Chair of the SEC, demanding to immediately stop reviewing any applications to issue exchange-traded funds based on digital assets. According to the senators, crypto ETFs pose “enormous risks” to retail investors.
The senators argue that the approval of crypto ETFs is causing investors to pay more attention to markets “rife with fraud and manipulation.” Specifically, Reed and Butler are urging the SEC to prevent the recent approval of spot Bitcoin ETFs from becoming a precedent for further proliferation of the initiative. The senators asked Gensler to deny nine existing applications for spot Ethereum ETFs to prevent future applications for securities based on other altcoins.
In the letter, the senators also push for increased oversight of spot Bitcoin ETFs and demand additional regulation of brokers and issuers of these investment products.
Paul Grewal, General Counsel at Coinbase, said that the senators’ concerns are completely unfounded, as Bitcoin and most major altcoins have a high level of liquidity that outperforms even the largest S&P 500 stocks. According to Grewal, their letter merely reflects the growing political concern over the success of the spot Bitcoin ETF market.
By the way, spot Bitcoin ETFs continue to set new records. Barchart reports that on March 14, the trading volume of iShares Bitcoin Trust (IBIT) exceeded $3.9 billion, breaking all previous records. Moreover, issuers of spot Bitcoin ETFs are actively buying BTC back as the popularity of their assets grows.
