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US Senators urge SEC Chairman to deny new crypto ETFs: Report

Jack Reed and Laphonza Butler allegedly state that other crypto lack what is needed to support associated ETPs.

US Senators urge SEC Chairman to deny new crypto ETFs: Report

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US Senators Jack Reed and Laphonza Butler sent a letter to SEC’s Chairman Gary Gensler urging the denial of more crypto exchange-traded products (ETP) on Mar. 11, as reported by Watcher Guru today.

The supposed letter was revealed via an X (formerly Twitter) post. Reed and Butler allegedly asked Gensler to “take steps to protect investors”, as SEC crypto ETF approvals “provided a green light for Wall Street to sell volatile cryptocurrency investments to ordinary Americans.”

Moreover, according to the US Senators, the naming and marketing of many Bitcoin ETPs “appear to obfuscate important characteristics about these investments,” stating that the investment instruments approved by the SEC are exchange-traded products, which are different from exchange-traded funds (ETFs) and mutual funds.

“Given the significant and unique risks posed by cryptocurrency, it is critical that Americans receive accurate, comprehensive information about bitcoin ETPs,” they added to the document. 

Butler and Reed allegedly add that Bitcoin ETPs are not subject to Investment Company Act of 1940 protections, including fiduciary duty, limits on leverage, and custody requirements. 

If this letter is confirmed to be real and is considered by Gensler, it might affect the chances of a spot Ethereum ETF approval in the US in May, as expected by the crypto market, as the document highlights the supposed disbelief of the Senators that other crypto “show the trading volumes or integrity to support associated ETPs.”

As for the measures to tackle what the Senators think is a threat to consumer safety, they suggest: vetting the communication channels used by brokers and advisers to distribute information on bitcoin ETPs; a thorough review of financial professionals recommending these cryptocurrency ETPs is sought to confirm that client interests remain paramount, and clamping down on the use of what they think is vague or misleading names for bitcoin ETPs in official filings and documents.

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