Ether ETFs Should Be Fully Approved by September, Says SEC Chair Gensler

Gensler Addresses Senate Subcommittee on SEC’s Crypto Regulations

Key Points from the Hearing:

1. Smooth Approval Process for ETFs:

• SEC Chair Gary Gensler assured the Senate Appropriations Committee that the process for approving ETFs is “working smoothly”.
• After initial approval, final registration requirements (S-1 filings) are being handled at the “staff level”.
• Once approved, these ETFs, including those holding actual ether (ETH), can be listed.

1. Regulatory Jurisdiction Ambiguity:

• Gensler refrained from categorizing ETH as a commodity or security, maintaining the SEC’s ambiguous stance.
• CFTC Chief Rostin Behnam, however, affirmed that ETH is a commodity.

1. Oversight of Digital Assets:

• The SEC oversees securities tokens, while the CFTC oversees other types.
• Gensler reiterated his view that most digital assets should be considered securities and should comply with disclosure laws.
• He criticized the industry’s non-compliance with these regulations.

1. CFTC’s Regulatory Preparedness:

• Gensler suggested the CFTC isn’t equipped for a disclosure-based oversight system.
• Behnam acknowledged the CFTC’s lack of traditional regulatory tools (registration, custody, surveillance, oversight).
• He indicated that the CFTC would need a larger budget to effectively regulate the crypto market.

1. Prediction Markets and Election Contracts:

• Behnam addressed the CFTC’s stance against prediction markets like PredictIt, Polymarket, Zeitgeist, and Kalshi, particularly those predicting election outcomes.
• He asserted that commoditizing elections is against existing law and the CFTC is taking steps to ban such contracts.

Implications for Crypto Market:

• The approval of ether ETFs could significantly impact the market by providing more accessible trading options.
• The ongoing jurisdictional ambiguity between the SEC and CFTC could lead to further regulatory uncertainties.
• The CFTC’s need for increased authority and resources highlights the growing complexity of effectively regulating the crypto market.

These discussions underscore the evolving regulatory landscape for digital assets in the U.S., emphasizing the need for clarity and robust oversight mechanisms to ensure market integrity and investor protection.