SEC Chair Gensler has voiced concern over unethical conduct within crypto exchanges, noting that the introduction of spot Ethereum ETFs will require additional time.
Gensler’s comments were made during a June 5 interview on CNBC, where he also responded to Jim Cramer’s inquiries about potential exchange-traded products for cryptocurrencies beyond Bitcoin and Ethereum.
Gensler Criticizes Crypto Exchanges
Gensler stated that while the SEC had approved the associated 19-4b filings for spot Ethereum ETFs last month, the launch of these products would “take some time.”
He explained that the ETF applications are undergoing the normal procedural reviews, which inherently take time, but refrained from providing a specific timeline for their market debut.
However, Gensler soon turned his attention to the broader cryptocurrency market with a more critical perspective. He slammed the widespread unethical practices within crypto exchanges, stressing that the market is still plagued by fraud and manipulation.
“Crypto exchanges are engaging in practices that would never be allowed on the NYSE. Our laws don’t permit exchanges to trade against their customers, yet this is happening in the crypto space,” Gensler stated, drawing a line between crypto exchanges and traditional ones like the New York Stock Exchange.
Referencing recent high-profile failures like FTX and Celsius Network, Gensler stated that such illegal activities remain a big problem in the crypto market. He reaffirmed the SEC’s dedication to upholding market integrity through ongoing enforcement measures and highlighted the agency’s role as a civil law enforcement agency.
Gensler Highlights Regulatory Gaps in Crypto Market
While acknowledging some positive steps in regulation, Gensler voiced serious concerns about the inadequate disclosure and regulation in the cryptocurrency industry.
“These tokens, whether they’re well-known or obscure, have not provided the necessary disclosures required by law,” he noted, emphasizing that most cryptocurrencies do not meet the essential disclosure standards expected of regulated assets. This lack of transparency, Gensler argued, deprives investors of the crucial information needed to make informed decisions.
During the interview, Cramer also questioned Gensler about the possibility of ETFs for various lesser-known cryptocurrencies, including meme coins like SushiSwap (SUSHI) and Bonk (BONK), as well as other tokens such as Cardano, Cosmos, and MyNeighborAlice. Cramer pointed out that these tokens had traded millions of dollars in recent activity, asking whether they too should have their own ETFs.
While Gensler did not provide specific answers, he emphasized his stance on the inadequate disclosures of many crypto tokens, implying that these tokens are often unregistered securities.
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