Gensler Criticizes Crypto Exchanges For Questionable Practices, Says Spot ETH ETFs ‘Will Take Some Time’

SEC Chairman Gensler has expressed concern about unethical conduct within crypto exchanges, noting that the introduction of one-time Ethereum ETFs will require more time.

Gensler’s comments came during a June 5 interview with CNBC, where he also responded to Jim Cramer’s inquiries about possible exchange-traded products for cryptocurrencies beyond Bitcoin and Ethereum.

Gensler criticizes crypto exchanges

Gensler stated that while the SEC had approved the associated 19-4b filings for spot Ethereum ETFs last month, the launch of these products “would take some time.”

He explained that ETF applications are undergoing normal procedural reviews, which inherently take time, but refrained from providing a specific timeline for their market debut.

However, Gensler soon turned his attention to the broader cryptocurrency market with a more critical perspective. He criticized widespread unethical practices within crypto exchanges, stressing that the market is still plagued by fraud and manipulation.

“Crypto exchanges are engaging in practices that would never be allowed on the NYSE. Our laws do not allow exchanges to trade against their customers, but this is happening in the crypto space,” Gensler said, drawing a line between cryptographic exchanges and traditional ones such as the New York Stock Exchange.

Referring to recent high-profile failures such as FTX and Celsius Network, Gensler stated that such illegal activities remain a huge problem in the crypto market. He reaffirmed the SEC’s dedication to maintaining market integrity through ongoing enforcement actions and emphasized the agency’s role as a civil law enforcement agency.

Gensler highlights regulatory gaps in the crypto market

While acknowledging some positive steps in regulation, Gensler expressed serious concerns about inadequate disclosure and regulation in the cryptocurrency industry.

“These witnesses, whether known or obscure, have failed to provide the necessary disclosures required by law,” he noted, noting that most cryptocurrencies do not meet the essential disclosure standards expected of regulated assets. This lack of transparency, Gensler argued, deprives investors of crucial information needed to make informed decisions.

During the interview, Cramer also questioned Gensler about the possibility of ETFs for several lesser-known cryptocurrencies, including meme coins like SushiSwap (SUSHI) and Bonk (BONK), as well as other tokens like Cardano, Cosmos, and MyNeighborAlice. Cramer noted that these chips have traded millions of dollars in recent activity, wondering if they should also have their own ETFs.

While Gensler did not provide specific answers, he emphasized his position on the improper disclosures of many crypto tokens, implying that these tokens are often unregistered securities.

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