WASHINGTON, D.C.—Director of Securities Policy Benjamin Schiffrin issued the following statement on the filing of Better Markets’ Comment Letter to the Securities and Exchange Commission (SEC) in response to proposed rule changes filed by national securities exchanges to list and trade options on spot ether exchange-traded products (“ETPs”):

“The SEC endangered retail investors by approving spot bitcoin ETPs, spot ether ETPs, and options on spot bitcoin ETPs. It must reverse this trend and deny proposed rule changes to list and trade options on spot ether ETPs. Ether is incredibly volatile, and retail investors could suffer immense harm trading options on an ETP whose underlying asset is ether.

“Approving options trading on an ETP with such a volatile underlying asset is courting disaster. Retail investors already lose billions of dollars trading options. Options on spot ether ETPs would only give sophisticated market participants another way to use options trading to fleece retail investors.

“Options on spot ether ETPs would also threaten financial stability by further entangling traditional finance with a volatile asset that would be susceptible to runs. That is because ether uses a Proof-of-Stake (PoS) protocol. PoS requires more capital, and because more capital is at stake, there is a higher risk of runs. A run on ether could have all sorts of harmful consequences for investors, especially now that investors are able to more easily invest in ether through the ETPs. The SEC should never have approved spot ether ETPs in the first place.  It must not compound that mistake by approving options on spot ether ETPs.”

Our comment letter is available here.

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Better Markets is a non-profit, non-partisan, and independent organization founded in the wake of the 2008 financial crisis to promote the public interest in the financial markets, support the financial reform of Wall Street and make our financial system work for all Americans again. Better Markets works with allies—including many in finance—to promote pro-market, pro-business and pro-growth policies that help build a stronger, safer financial system that protects and promotes Americans’ jobs, savings, retirements and more. To learn more, visit www.bettermarkets.org.