Markets
Ether ETFs should be fully approved by September, says US SEC Chairman Gensler
The final approvals for Exchange Traded Funds (ETFs) that trade Ethereum’s ether (ETH) The plan is expected to be completed this summer, U.S. Securities and Exchange Commission Chairman Gary Gensler told senators at a budget hearing Thursday.
Gensler told a subcommittee of the Senate Appropriations Committee in a hearing justifying the market regulator’s budget that the process is “running smoothly” after the initial approval of a group of ETFs. The agency had previously granted the first round of applications, but said the final registration requirements — the documents known as S-1s — are now being handled at the “staff level.”
Once those requests are approved, the new ETFs can be listed, opening up broader markets for easy-to-trade funds that hold real ether, much like the previous creation of bitcoin spot ETFs that hold (BTC). The SEC had initially blocked the bitcoin ETF effort until a federal court ruled that the agency was mishandling the issue, and Gensler said the SEC has since followed that decision and allowed them.
When asked directly whether ETH is a commodity, Gensler did not respond with a yes or no, maintaining the uncertain position his agency has held on that asset. At the same hearing, when asked whether it was a commodity, Commodity Futures Trading Commission (CFTC) head Rostin Behnam replied: “Yes.”
The question is important when looking for the right US watchdog for various tokens. The SEC will oversee the securities tokens and the CFTC will have authority over the rest. While Gensler has repeatedly said that the vast majority of digital assets should be considered securities, he refuses to identify which ones fall into which basket beyond what 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 not registered and violate securities law.
Gensler, who ran both agencies as president, said the industry is “making a mockery of the rules.” He also suggested that the CFTC is not currently well prepared to oversee a disclosure-based oversight 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 cryptocurrency markets if, as legislative efforts in Congress would certainly indicate, it were to gain more responsibility for overseeing cryptocurrency trading.
“We don’t have those traditional regulatory tools — registration, custody, surveillance, oversight — that have made America’s capital markets and derivatives markets so strong,” he said, adding that the CFTC would need a larger budget to implement that is.
Behnam was also asked about prediction markets popularized by companies like PredictIt, Polymarket, Zeitgeist and Kalshi and his agency’s stance against contracts that predict the outcome of elections. His agency recently moved to block such contracts.
“The last thing we need right now is some kind of commodification of elections,” Behnam said. “This, in my opinion, is clearly against existing law and we are taking steps to ensure they are banned.”
UPDATE (June 13, 2024, 4:22 pm UTC): Adds additional comments from Gary Gensler and Rostin Behnam.