Two U.S. senators are calling on Gary Gensler to halt future crypto exchange-traded funds (ETFs), citing “tremendous risks” to retail investors.
On March 11th letterDemocratic Sens. Jack Reed and LaFonza Butler say allowing the Securities and Exchange Commission to approve more crypto ETFs would expose investors to a “slightly traded” market rife with fraud and manipulation. He argued that it would be.
There are eight proposed Spot Ether ETF applications awaiting approval by the SEC, and there is hope that other altcoins will eventually follow the same path.
“Retail investors face significant risks from ETPs that reference cryptocurrencies that are sparsely traded or whose prices are particularly susceptible to pump-and-dump and other fraudulent schemes. '', the letter says.
Mr. Reed and Mr. Butler also urged the SEC to ensure that the recent approval of a Bitcoin (BTC) ETF does not set a precedent for further approvals.
They argued that while the Bitcoin market shows “serious weakness”, it is more established and well-scrutinized than other smaller crypto markets.
“No matter how vulnerable Bitcoin is to fraud and manipulation, markets for other cryptocurrencies are far more exposed to fraud.”
The senators also called on the SEC to take “several concrete actions” on Bitcoin ETF products that have already been launched, and called for Bitcoin ETF brokers and advisors to be subject to more regulatory oversight.
Alexander Grieve, head of government relations at crypto venture capital firm Paradigm, suggested that the success of the Spot Bitcoin ETF is “obviously causing chaos” on Capitol Hill.
Related: Bitcoin price hits new all-time high of $73.6 million as ETFs eat up supply
Crypto industry experts say the letter is evidence of growing political pressure on Gensler, making it less likely that the Ether ETF will be approved in May.
“Bitcoin ETF blockbuster is unsettling the upper echelons of the Democratic Party. Buyer’s remorse. This is part of the reason why we are pessimistic about the potential approval of the Spot Ethernet ETF.” Said Balchunas, Posted by X on March 15th.
Balciunas said on March 11 that there was only a 35% chance that the Spot Ether ETF would be approved by May. Braciunas predicted a 70% chance of approval in January, but told Cointelegraph that the SEC's “radio silence” on prospective fund issuers is a bad sign, among several other factors. .
Both Butler and Reid have been involved in several bills aimed at cracking down on cryptocurrencies in the United States.
On December 11, Butler joined Sen. Elizabeth Warren as a co-sponsor of the controversial Digital Asset Money Laundering Prevention Act. In July, Reid proposed bipartisan legislation that would strengthen know-your-customer (KYC) and anti-money laundering (AML) regulations and sanctions requirements for decentralized finance (DeFi).
Bitcoin Man, Hall of Fire: China strengthens Bitcoin bull market, $1 million by 2028
