Markets
Ether ETFs Should Be Fully Approved by September, Says US SEC Chairman Gensler
Final approvals for exchange-traded funds (ETFs) trading Ethereum ether (ETH) should be completed this summer, U.S. Securities and Exchange Commission Chairman Gary Gensler told senators at a budget hearing Thursday.
Gensler told a Senate Appropriations Committee subcommittee during a hearing justifying the market regulator’s budget that the process “works smoothly” after the initial approval of a group of ETFs. The agency previously accepted the first round of applications, but it said the final registration requirements — filings known as S-1s — are now handled at the “personnel level.”
Once these filings are approved, the new ETFs can be listed, opening the broader markets to easy-to-trade funds that hold real ether, much like the earlier creation of Bitcoin spot ETFs that hold (BTC). The SEC had initially blocked efforts for Bitcoin ETFs until a federal court ruled that the agency had mishandled the matter, and Gensler said the SEC has since followed that decision and allowed them.
When asked directly if ETH was a commodity, Gensler answered neither yes nor no, thus maintaining the uncertain position his agency held on the asset. At the same hearing, when asked if it was a commodity, Commodity Futures Trading Commission (CFTC) head Rostin Behnam responded, “Yes.”
The question is important when trying to search for the right US watchdog for various tokens. The SEC will supervise the securities tokens and the CFTC will have authority over the rest. Although Gensler has repeatedly stated that the vast majority of digital assets should be considered securities, he declines to identify which ones fall into which basket, aside from those his agency has listed in enforcement actions.
“While not all cryptocurrencies are cryptographic securities – some are under Chairman Behnam’s jurisdiction – those that are have an obligation to disclose them to the public,” Gensler said, repeating his argument that most tokens are unregistered and violate securities law.
Gensler, who led both agencies as president, said the industry “doesn’t care” about the rules. He also suggested that the CFTC is not currently well prepared to police a disclosure-based surveillance system because that is not what it does, unlike the SEC.
Behnam noted that the CFTC still lacks some of the authorities needed to police crypto markets if — as Congress’s legislative efforts would certainly have it — it were granted more responsibilities in overseeing crypto trading.
“We don’t have those traditional regulatory tools — registration, custody, monitoring, supervision — that have really made the U.S. capital markets and derivatives markets so strong,” he said, adding that the CFTC would need to a larger budget to achieve this.
Behnam was also asked about prediction markets popularized by companies such as PredictIt, Polymarket, Zeitgeist and Kalshi and his agency’s stance against contracts predicting the outcome of elections. His agency recently moved to the block such contracts.
“The last thing we need right now is to commodify the election,” Behnam said. “This, in my opinion, is clearly contrary to existing law, and we are taking steps to ensure that they are prohibited.”
UPDATE (June 13, 2024, 4:22 p.m. UTC): Adds additional comments from Gary Gensler and Rostin Behnam.