Regulation
Gensler Calls Out Crypto Exchanges for Unsavory Practices, Says Ethereum Spot ETFs ‘Will Take Some Time’
Chairman of the SEC Gary Gensler said point Ethereum The ETFs will “take some time” to launch despite the approval of their 19-4b filings last month.
Gensler said ETF requests are following normal procedures, which may take some time. He remained vague about the exact timing for the launch.
The SEC chairman also criticized cryptocurrency exchanges for unsavory practices and said the market remains riddled with them fraud and manipulation. He added that the SEC remains committed to ensuring the integrity of the markets.
Gensler made the statements during a June 5 press conference interview on CNBC in response to Jim Cramer’s questions about potential exchange-traded products for cryptocurrencies beyond Bitcoin and Ethereum.
Lack of proper disclosure
Despite positive regulatory progress, Gensler expressed concern about the lack of adequate disclosure and regulation in the broader cryptocurrency market. He said most cryptocurrencies do not meet the “fundamental disclosure requirements” of a regulated asset class.
According to the SEC Chairman:
“These tokens, whether well-known or obscure, did not provide the necessary information required by law.”
The SEC chairman pointed out that investors are not receiving the information they need to make informed decisions, a fundamental principle of the securities markets.
Gensler also addressed the potential risks posed by cryptocurrency exchanges, outlining a stark contrast to traditional exchanges like the New York Stock Exchange (NYSE).
The SEC chairman also criticized cryptocurrency exchanges for allegedly engaging in activities that would not be permitted under US laws, such as trading against their own customers, which creates significant conflicts of interest.
He said:
“Cryptocurrency exchanges are engaging in practices that would never be allowed on the NYSE. Our laws do not allow exchanges to trade against their customers, yet this is happening in the cryptocurrency industry.”
Gensler stressed the importance of protecting investors from fraud and manipulation, citing recent high-profile cases such as the collapse of FTX and Celsius Network. He added that such illicit activity continues to represent a significant portion of the cryptocurrency market and is a key area for regulators to focus on.
He mentioned ongoing enforcement actions and reiterated the SEC’s role as a civilian law enforcement agency committed to maintaining market integrity.
Artificial intelligence and fair competition
Gensler’s comments also touched on artificial intelligence (AI) and its implications for financial markets. He described artificial intelligence as the most transformative technology of our time, but warned of the risks associated with its use.
According to Gensler:
“AI can improve capital markets but also poses risks of conflict, fraud and systemic problems if not managed properly.”
The interview also covered broader market topics, including the balance between public and private markets and the need for fair competition.
Gensler highlighted the importance of public markets in providing transparent and accessible investment opportunities, while recognizing the growth of private credit markets.