Ethereum ETF could be in danger as pressure over SEC mounts

Two US senators said more crypto ETFs shouldn’t be approved. .
Spot Ether ETF's bullish view may fade if the SEC pays attention to the concerns raised in the senators' letters.
SEC and institutional brokers yet to comment on the senators’ letter.

Crypto ETFs could slow down on their success after democrat senators Jack Reed and Laphonza Butler sent a detailed letter to the US Security and Exchange Commission (SEC) chairman, Gary Gensler, asking him not to give any further approval.

Crypto ETFs approval is a wrong move, senators say

Crypto ETFs tracking the price of Bitcoin (BTC) debuted in the US in January, a move that sparked a bull run in the crypto market. The SEC's Bitcoin ETF approval allowed several reputable investment institutions, including BlackRock, Fidelity, and Ark21Shares, among many others, to give customers access to the most popular digital asset.

Less than two months after their launch, these ETFs have been one of the main catalysts for Bitcoin's price, sending it to a fresh all-time high of $73,600 on Thursday.

However, Jack Reed and Laphonza Butler said the SEC made the wrong move by greenlighting crypto ETFs. In a letter dated March 11, they stated several reasons why crypto ETFs pose a threat to the financial well-being of retail investors.

Furthermore, they accused brokers of violating fair disclosure rules by intentionally obscuring important information and employing "naming and marketing that appear to obfuscate important characteristics about these investments."

Also read: Cetera proclaims ‘prudent embrace’ of spot BTC ETF usage, expert says more to come

Spot Ether ETFs approval has slim chances

This letter comes at a time when eight spot Ether (ETH) ETFs from reputable firms like BlackRock, Franklin Templeton, VanEck, etc., await a decision from the SEC later in May.

In a post on X, ETF analyst Eric Balchunas stated the success of Bitcoin ETF is upsetting high-ranking Democrats, leading to a pessimistic view of a spot ETH ETF approval chances.

The senators also mentioned that the SEC should slow down in approving any other crypto ETFs."While the bitcoin market has displayed serious weakness, it is nonetheless far more established and scrutinized than the market for any other cryptocurrency," they said.

Reed and Butler expressed concerns that ETPs representing cryptocurrencies with low trading volume will expose retail investors to high risks.

The market has yet to respond to this news as institutional brokers or the SEC haven't commented on the letter as of the time of writing.

Share: Cryptos feed

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.