Markets
Ether ETFs Must Be Fully Approved by September, US SEC Chairman Gensler Says
Final approvals for exchange-traded funds (ETFs) trading Ethereum ether (ETH) should be completed this summer, U.S. Securities and Exchange Commission Chairman Gary Gensler told senators at a budget hearing Thursday.
Gensler told a Senate Appropriations Committee subcommittee, in a hearing justifying the market regulator’s budget, that the process is “working well” after the initial approval of a group of ETFs. The agency had already granted the initial round of requests, but he said the final filing requirements — filings known as S-1s — are now being handled “at the staff level.”
Once these filings are approved, the new ETFs will be able to be listed, opening up wider markets for easy-to-trade funds that hold real ether, much like the previous establishment of bitcoin spot ETFs that hold (BTC). The SEC initially blocked the push for bitcoin ETFs until a federal court ruled that the agency was mishandling the issue, and Gensler said the SEC has since followed that ruling and allowed them.
When asked directly whether ETH is a commodity, Gensler did not answer yes or no, maintaining the uncertain position his agency holds on this asset. At the same hearing, when asked if it was a commodity, the head of the Commodity Futures Trading Commission (CFTC), Rostin Behnam, responded: “Yes.”
The question is important when trying to seek the appropriate US oversight body for various tokens. The SEC will oversee security tokens and the CFTC will have authority over the rest. While Gensler has repeatedly stated that the vast majority of digital assets should be considered securities, he declines to identify which of them fall into each group beyond those 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 to the public,” Gensler said, repeating his argument that most tokens remain unregistered and are in violation securities law.
Gensler, who ran both agencies as chairman, said the industry is “flouting” the rules. He also suggested that the CFTC is not currently well prepared to police a disclosure-based supervisory 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 guide – it gains more responsibility for overseeing cryptocurrency trading.
“We don’t have those traditional regulatory tools — registration, custody, surveillance, supervision — that have really made the American capital markets and the American derivatives markets so strong,” he said, adding that the CFTC would need a larger budget to make that happen.
Behnam was also asked about the prediction markets popularized by companies like PredictIt, Polymarket, Zeitgeist and Kalshi and his agency’s stance against contracts that predict the outcome of elections. Your 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 more comments from Gary Gensler and Rostin Behnam.