Democrats Ask SEC's Gensler to Block Approval of More Crypto ETPs

Senators say that retail investors face 'enormous risks' from such products because thin order books for some cryptocurrencies

Senators Jack Reed and Laphonza Butler urge the SEC to block crypto ETPs, citing risks from poor disclosure and thin liquidity.

Two Democrat Senators are urging the Securities and Exchange Commission to block any further crypto exchange-traded products to protect retail investors from risks associated with poor broker disclosure and thin liquidity in major cryptocurrencies. “Brokers’ communications falsely equated cryptocurrency with cash; in others, they provided misleading explanations of cryptocurrency’s risks,” they wrote. “These alarming deficiencies raise significant concerns that brokers and advisers may now provide incomplete and deceptive information about bitcoin ETPs to retail investors.”

“Retail investors should be made aware of how these ETPs differ from more common funds which they may have experience,” they said in the letter, writing that bitcoin is not subject to the same protections under the Investment Company Act of 1940 that ETFs which hold shares of various companies would have.– which they call the most established and scrutinized cryptocurrency – is displaying weakness, and other cryptos are far more susceptible to misconduct.

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