SEC Chairman Gary Gensler said the launch of Ethereum ETFs will “take some time” despite the approval of the associated 19-4b filings last month.
Gensler said the ETF applications are going through normal procedures, which could take some time. He remained vague about an exact timetable for the launch.
The SEC chairman also slammed crypto exchanges for unsavory practices, saying the market is still rife with fraud and manipulation. He added that the SEC remains committed to ensuring integrity in all markets.
Gensler made the statements during a June 5 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 the positive regulatory developments, Gensler expressed concerns about the lack of proper disclosure and regulation in the broader crypto market. He said most cryptocurrencies do not meet the “basic disclosure requirements” expected of a regulated asset class.
According to the SEC Chairman:
“These tokens, whether known or obscure, have not generated the necessary disclosures required by law.”
The SEC chairman emphasized that investors are not receiving the information necessary to make informed decisions, a fundamental principle of the securities markets.
Gensler also addressed the potential risks of crypto exchanges, drawing a stark contrast to traditional stock exchanges such as the New York Stock Exchange (NYSE).
The SEC chairman also criticized crypto exchanges for engaging in activities that would not be allowed under US law – such as trading against their customers, which creates significant conflicts of interest.
He said:
“Crypto exchanges engage in practices that would never be allowed on the NYSE. Our laws do not allow exchanges to trade against their clients, yet this is happening in the crypto space.”
Gensler emphasized 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 illegal activities still constitute a significant portion of the crypto market and are a key area of focus for regulators.
He mentioned ongoing enforcement actions and reiterated the SEC’s role as a civilian law enforcement agency committed to maintaining market integrity.
AI and fair competition
Gensler’s comments also touched on artificial intelligence (AI) and its implications for financial markets. He described AI 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 it also poses risks of conflict, fraud and systemic problems if not managed properly.”
The interview also touched on broader market topics, including the balance between public and private markets and the need for fair competition.
Gensler emphasized the importance of public markets in providing transparent and accessible investment opportunities, while also recognizing the growth of private credit markets.