Senators Jack Reed and Laphonza Butler sent a letter to SEC Chairman Gary Gensler. They claim that cryptocurrency ETF markets are “riddled with fraud and manipulation.” Policymakers say the January approval of spot Bitcoin ETFs should not set a precedent for further approval of exchange-traded funds linked to other crypto assets.
According to the senators, the Bitcoin market is very volatile, but it is more stable and better studied in comparison with altcoins. Eight applications to launch ether spot ETFs are currently pending with the SEC, and the authors of the letter hope that they will not receive regulatory approval. Reed and Butler also called on the SEC to take action against already launched Bitcoin ETFs, demanding that brokers and advisors handling these investment products be subject to increased regulatory scrutiny.
“As vulnerable as Bitcoin is to fraud and manipulation, other cryptocurrency markets are much more susceptible to misconduct. Altcoins are much more susceptible to pump and dump schemes, so there are huge risks for retail investors,” the senators’ letter states.
Bloomberg Senior Analyst Eric Balchunas
named This is a letter of political pressure on the department. As Balchunas put it, the wild success of the Bitcoin ETF has upset senior Democrats, making it less likely that an Ether ETF will be approved.
Previously, Butler and Reed took part in the development of bills aimed at combating cryptocurrencies in the United States. Last year, Butler joined Senator Elizabeth Warren's controversial bill to combat money laundering through cryptocurrencies. As for Reed, in July he supported a bipartisan bill that would tighten Know Your Customer (KYC) and anti-money laundering (AML) procedures, as well as strengthen sanctions for DeFi projects.
Recall that in February, the SEC delayed a decision on Invesco Galaxy's application to launch an Ethereum ETF. A few days ago, Gensler said he was not yet ready to comment on future decisions to approve or reject these products.
Source: Bits
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