Senators urge SEC’s Gensler to refrain from granting further approval for crypto ETFs

Two Democratic senators, Jack Reed and Laphonza Butler, have called on Gary Gensler, the chairman of the Securities and Exchange Commission (SEC), to halt the approval of any more cryptocurrency exchange-traded funds (ETFs). In a letter dated March 11, Reed and Butler argued that allowing the SEC to approve additional crypto ETFs would expose retail investors to highly risky markets that are prone to fraud and manipulation. Currently, there are eight proposed spot Ether ETF applications awaiting SEC approval, with hopes that other altcoins could follow suit. The senators also emphasized the need for increased oversight of Bitcoin ETFs and urged the SEC not to set a precedent for further approvals based on the recent approval of spot Bitcoin ETFs. They claimed that while the Bitcoin market has exhibited weaknesses, it is still more established and closely scrutinized compared to smaller cryptocurrencies. Additionally, Reed and Butler called for several specific measures to regulate BTC ETF brokers and advisors. The letter from the senators is seen as mounting political pressure on Gensler, which could potentially hinder the approval of an Ether ETF in May. The success of Bitcoin ETFs has reportedly unsettled some high-ranking Democrats, leading to pessimism regarding the chances of a spot Ether ETF approval. In December 2021, Butler co-sponsored Senator Elizabeth Warren’s Digital Asset Anti-Money Laundering Act bill, while Reed sponsored a bipartisan bill in July that aimed to strengthen regulations and sanctions requirements for decentralized finance (DeFi).