WASHINGTON, D.C.—Director of Securities Policy Benjamin Schiffrin issued the following statement after the Securities and Exchange Commission (SEC) approved proposed rule changes filed by national securities exchanges to list and trade shares in spot ether exchange-traded products (ETPs):
“Today the SEC doubled down on its historic mistake of approving spot bitcoin ETPs. Its decision to approve spot ether ETPs will only enable investors to be further victimized by the lawless crypto industry. Just last week, the Department of Justice charged two brothers with exploiting the integrity of the Ethereum blockchain to fraudulently obtain $25 million worth of cryptocurrency in 12 seconds. The SEC’s decision to approve ETPs where the underlying asset is ether, the native currency on the Ethereum network, is inexplicable.
“Indeed, while last week’s indictment concerning activity on the Ethereum network highlights the dangers that spot ether ETPs pose specifically, it is only the latest in a long line of lawlessness in the crypto industry generally. Sam Bankman-Fried, the FTX founder who was convicted of stealing billions of dollars, and Changpeng Zhao (CZ), the Binance founder who pled guilty to money laundering, have been sent to prison in the just last few months. The SEC’s approval of spot ether ETPs provides the crypto industry with just another way to endanger retail investors and threaten the broader financial system.
“In our original and supplemental comment letters, we highlighted the reasons why the proposed rule changes to list and trade shares in spot ether ETPs should have been rejected. Those reasons included the fact that investors in a spot ether ETP would essentially be investing in ether, that ether is an extremely volatile asset, and that the Ethereum network itself has features that make it vulnerable to fraud and manipulation. Those reasons also included the fact that the approval of spot ether ETPs would allow the crypto industry to market the products to retail investors as SEC-sanctioned products issued by trusted financial firms. Yet despite the risks posed by investing in ether, that is now exactly what will happen. By approving the applications to list and trade spot ether ETPs, the SEC failed to live up to its mission to protect investors and the markets.”
###
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.
