Democrat Senators Urge SEC to Reject Other Crypto ETF Approvals

Democrat Senators call for the SEC to halt approvals of non-Bitcoin crypto ETPs, citing risks and regulatory concerns.
Democrat Senators Urge SEC to Reject Other Crypto ETF Approvals
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Key Takeaways

  • Senators Jack Reed and Laphonza Butler call for a halt on non-Bitcoin crypto ETP approvals.
  • The senators raised concerns over investor risks and misleading information.
  • Coinbase defends the integrity of the ether market and the role of crypto in financial modernization.

Senators Jack Reed and Laphonza Butler have urged the SEC to restrict further approvals of non-Bitcoin crypto exchange-traded products (ETFs).

They highlight the risks to retail investors from poor broker disclosure and thin liquidity in major cryptocurrencies.

A FINRA survey found that 70% of broker communications with investors violated fair disclosure rules.

Concerns over misleading information

The Senators point out that brokers often misleadingly compare cryptocurrency to cash and provide inadequate explanations of the risks.

We do not believe that other cryptocurrencies show the trading volumes or integrity to support associated ETPs.

They emphasize the need for clearer information about crypto ETPs, noting that Bitcoin ETFs/ETPs are not subject to the same protections as traditional ETFs under the Investment Company Act of 1940.

They express particular concern about the susceptibility of non-Bitcoin cryptocurrencies to fraudulent schemes.

Retail investors would face enormous risks from ETPs…whose prices are especially susceptible to pump-and-dump or other fraudulent schemes.

Coinbaser responds to senators’ claims

Coinbase’s Paul Grewal challenges the Senators’ assertions, highlighting the strong trading volume of ether (ETH), which is considered a potential candidate for an ETF.

Grewal argues that the ether market is deep and liquid, with trading volumes surpassing many S&P 500 stocks.

He maintains that cryptocurrencies are crucial for modernizing the financial system.

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