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Approval chances for pending ethereum exchange-traded fund (ETF) applications in May are limited as two US senators urged the Securities and Exchange Commission (SEC) to reject other crypto ETF proposals.
In the March 11 letter to SEC Chairman Gary Gensler, Senators Jack Reed and Laphonza Butler advised the financial regulator to step up its scrutiny of bitcoin ETFs.
Lawmakers Urge SEC to Stop Further crypto ETF Approvals
Lawmakers expressed concern about approving additional crypto ETFs on top of bitcoin, citing potential risks to retail investors.
They argued that other cryptocurrencies, such as ethereum, lack sufficient trading volumes and integrity to support related ETPs. Furthermore, they doubt that the futures markets for these cryptocurrencies correlate closely with spot markets, making it difficult to conduct effective market surveillance and prevent fraudulent activities.
They aggregate:
“The SEC should strictly limit the precedential application of these approvals. While the bitcoin market has shown serious weaknesses, it is much more established and vetted than the market for any other cryptocurrency. As vulnerable as bitcoin is to fraud and manipulation, other cryptocurrency markets are much more exposed to misconduct.”
As such, they concluded that the financial regulator should protect retail investors “from ETPs that reference thinly traded cryptocurrencies or cryptocurrencies whose prices are especially susceptible to pump and dump or other fraudulent schemes.”
The lawmakers' letter came as Bloomberg analysts significantly reduced the probability of a timely approval of the ethereum ETF to 35%.
Bloomberg Senior ETF Analyst Eric Balchunas He suggested that the success of bitcoin ETFs may have unsettled some politicians, contributing to pessimism around the approval of eth spot ETFs.
SEC Could Face Lawsuits
Paul Grewal, Chief Legal Officer at Coinbase, highlighted the possibility of significant legal conflicts if the SEC decides to reject pending ethereum ETF applications.
Grewal emphasized that numerous digital assets, including ethereum, boast market quality metrics that outperform even the largest traded stocks.
According to:
“Compared to bitcoin, the eth spot and future markets demonstrate EXACTLY the same type of high, consistent correlation that market surveillance would allow.”
Accordingly, Grewal argued that the SEC's denial of an ethereum ETF application would be based on flawed reasoning, given the strong market performance exhibited by ethereum and similar digital assets.
The post US Senators Pressure SEC to Reject Other crypto ETF Proposals, Casting Doubt on ethereum ETF Approval Chances appeared first on CryptoSlate.
