Crypto
US Senators Demand SEC Halt Crypto ETP Approvals Due to Disclosure Concerns
The Securities and Exchange Commission (SEC) is facing
pressure from Democratic senators to halt the approval of new cryptocurrency
exchange-traded products (ETPs), citing concerns over risks to retail
investors.
According to a letter written to the regulator on
March 11, Senators Jack Reed and Laphonza Butler emphasize the dangers posed by
inadequate disclosures by brokers and insufficient liquidity in major
cryptocurrencies.
The senators mentioned: “We write to urge the
Securities and Exchange Commission (SEC) to take steps to protect investors
following its recent approval of the listing and trading of certain spot
Bitcoin exchange-traded products (ETPs).”
“The SEC’s approvals have provided a green light
for Wall Street to sell volatile cryptocurrency investments to ordinary
Americans through their brokerage and retirement accounts.”
The success of the BTC spot products clearly ruffling some feathers on the Hill. @SenatorJackReed and @Senlaphonza write to the @SECGov urging:
-no further ETPs for other tokens
-make life difficult (i.e. examinations/reviews) for brokers and advisers that recommend BTC ETPs pic.twitter.com/enxdumC02N— Alexander Grieve (@AlexanderGrieve) March 14, 2024
Senators Reed and Butler highlighted findings from a
survey by FINRA revealing that 70% of brokers’ communications with retail
investors violated fair disclosure rules.
Specifically, the legislators expressed alarm over
brokers falsely equating cryptocurrency with cash and providing misleading
explanations of cryptocurrency risks. Such deficiencies raise concerns about
incomplete and deceptive information regarding Bitcoin ETPs.
Risk Factors
The senators argue that labeling spot Bitcoin ETFs as such obscures important characteristics,
potentially misleading retail investors. They stressed the need for investors
to understand the differences between ETPs and traditional funds.
Additionally, Reed and Butler expressed skepticism
about the integrity of cryptocurrencies , particularly highlighting Bitcoin’s
vulnerabilities and susceptibility to fraudulent schemes. They warned of the risks retail investors could face
from ETPs linked to cryptocurrencies, especially those prone to price
manipulation.
In January, the SEC approved 11 spot Bitcoin ETFs.
This approval happened after years of anticipation and rejections, signaling a
significant shift in how investors can access and engage with cryptocurrencies
on traditional financial platforms.
The approval of spot Bitcoin ETFs simplifies retail
investors’ access to cryptocurrencies, enabling them to trade crypto through
their brokerage accounts. This eliminates the need for separate crypto exchanges
and mitigates risks associated with direct holdings, such as security breaches
and fraud.
The Securities and Exchange Commission (SEC) is facing
pressure from Democratic senators to halt the approval of new cryptocurrency
exchange-traded products (ETPs), citing concerns over risks to retail
investors.
According to a letter written to the regulator on
March 11, Senators Jack Reed and Laphonza Butler emphasize the dangers posed by
inadequate disclosures by brokers and insufficient liquidity in major
cryptocurrencies.
The senators mentioned: “We write to urge the
Securities and Exchange Commission (SEC) to take steps to protect investors
following its recent approval of the listing and trading of certain spot
Bitcoin exchange-traded products (ETPs).”
“The SEC’s approvals have provided a green light
for Wall Street to sell volatile cryptocurrency investments to ordinary
Americans through their brokerage and retirement accounts.”
The success of the BTC spot products clearly ruffling some feathers on the Hill. @SenatorJackReed and @Senlaphonza write to the @SECGov urging:
-no further ETPs for other tokens
-make life difficult (i.e. examinations/reviews) for brokers and advisers that recommend BTC ETPs pic.twitter.com/enxdumC02N— Alexander Grieve (@AlexanderGrieve) March 14, 2024
Senators Reed and Butler highlighted findings from a
survey by FINRA revealing that 70% of brokers’ communications with retail
investors violated fair disclosure rules.
Specifically, the legislators expressed alarm over
brokers falsely equating cryptocurrency with cash and providing misleading
explanations of cryptocurrency risks. Such deficiencies raise concerns about
incomplete and deceptive information regarding Bitcoin ETPs.
Risk Factors
The senators argue that labeling spot Bitcoin ETFs as such obscures important characteristics,
potentially misleading retail investors. They stressed the need for investors
to understand the differences between ETPs and traditional funds.
Additionally, Reed and Butler expressed skepticism
about the integrity of cryptocurrencies , particularly highlighting Bitcoin’s
vulnerabilities and susceptibility to fraudulent schemes. They warned of the risks retail investors could face
from ETPs linked to cryptocurrencies, especially those prone to price
manipulation.
In January, the SEC approved 11 spot Bitcoin ETFs.
This approval happened after years of anticipation and rejections, signaling a
significant shift in how investors can access and engage with cryptocurrencies
on traditional financial platforms.
The approval of spot Bitcoin ETFs simplifies retail
investors’ access to cryptocurrencies, enabling them to trade crypto through
their brokerage accounts. This eliminates the need for separate crypto exchanges
and mitigates risks associated with direct holdings, such as security breaches
and fraud.
Cryptocurrency ATMs (sometimes known as crypto ATMs or Bitcoin ATMs) are playing a bigger role in scams than ever before. Data from the Federal Trade Commission shows consumers reported over $100 million in losses per year, and there are no signs that it is slowing down. Scammers are capitalizing on the accessibility of these machines, and they are employing tried-and-true […]
Crypto
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