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Senators Urge SEC: No Extra Crypto ETFs
In a March 11 letter despatched to Gensler, senators Jack Reed and Laphonza Butler requested the SEC chairman to “take steps to guard traders”, because the approval of Bitcoin (BTC) ETFs in January “supplied a inexperienced mild for Wall Avenue to promote risky cryptocurrency investments to abnormal Individuals.”
The 2 lawmakers claimed that the SEC’s approval of extra crypto ETF merchandise would expose traders to “thinly traded” markets awash with fraud and manipulation.
Roughly seven proposed spot Ethereum (ETH) ETF applications are at the moment on the SEC’s desk, and there are hopes that different altcoins like Ripple’s XRP and Solana (SOL) may finally comply with ETH’s lead.
Butler and Reed famous that Bitcoin — which they take into account essentially the most established and monitored crypto asset — is portraying weak spot, and different cryptocurrencies are way more susceptible to “misconduct”.
 
“We don’t consider that different cryptocurrencies present the buying and selling volumes or integrity to assist related ETPs,” the senators wrote. “Retail traders would face huge dangers from ETPs…whose costs are particularly prone to pump-and-dump or different fraudulent schemes.”
In addition they contend that by labelling Bitcoin exchange-traded funds as such, the identify “obfuscates vital traits about these investments.”
“Retail traders ought to be made conscious of how these ETPs differ from extra widespread funds which they might have skilled,” they said, suggesting that BTC isn’t topic to the identical protections below the Funding Firm Act of 1940, together with fiduciary obligation, limits on leverage, and custody necessities, that ETFs which maintain shares of assorted corporations would have.
As for the measures to deal with what Butler and Reed consider is a menace to investor security, they recommend BTC ETF brokers and advisors be subjected to extra stringent regulatory oversight.
Coinbase CLO Strikes Again
Coinbase chief authorized officer Paul Grewal has criticized the senators’ letter to Gensler. “Respectfully, Senators, the proof factors precisely the alternative manner,” Grewal opined in an X post.
The CLO defined that ether, believed to be the following crypto asset to have a spot ETF, has high quality metrics that “exceed even the most important traded equities.”
“ETH’s spot market is deep and liquid — solely two S&P 500 shares have increased notional greenback buying and selling quantity,” Grewal postulated.
As ZyCrypto reported beforehand, Coinbase met with the Securities and Alternate Fee to debate Grayscale’s proposal to transform its Ethereum Belief right into a spot ETH ETF, the place the alternate argued that if the regulator greenlighted BTC ETFs, they need to give the nod to ETH ETFs as properly.
Grewal identified at present that there’s empirical proof that proves Ethereum’s futures and spot markets have been simply as correlated as Bitcoin’s.
“When in comparison with Bitcoin, ETH’s future and spot market reveal EXACTLY the identical kind of excessive and constant correlation that might allow market surveillance.”
In the meantime, Alexander Grieve, vice chairman of the Tiger Hill Companions communications firm, interpreted the senators’ transfer as an indication of nervousness with the success of spot Bitcoin ETFs amongst some congressmen “The success of the BTC spot merchandise clearly ruffling some feathers on the Hill,” he remarked.
