US Senators Sound Alarm: Calls to Halt Crypto ETF Approvals Amidst Investor Risks

In a recent development, two US senators, Jack Reed and Laphonza Butler, have penned a letter urging Securities and Exchange Commission (SEC) Chair Gary Gensler to halt the approval of additional cryptocurrency exchange-traded funds (ETFs), citing significant risks to retail investors. Highlighting concerns over potential fraud and market manipulation, particularly in the less liquid markets of smaller cryptocurrencies, the senators emphasised the vulnerability of retail investors to schemes like pump-and-dump. They also cautioned against using the recent approval of spot Bitcoin ETFs as a precedent for further approvals, citing the relative stability and scrutiny of the Bitcoin market compared to other cryptocurrencies. Additionally, the senators called for enhanced oversight of existing Bitcoin ETF products and regulatory scrutiny of brokers and advisors. This move comes amidst growing concerns about the risks posed by cryptocurrency investments, with some industry analysts speculating that the success of Bitcoin ETFs may have prompted regulatory caution among lawmakers.