Senators highlighted the need for the US Securities and Exchange Commission (SEC) to take a stand against more cryptocurrency products.
US Senators Jack Reed and Laphonza Butler made a public call to SEC Chairman Gary Gensler regarding cryptocurrencies. In their statement, the Senators emphasized the need for the SEC to not approve more crypto exchange-traded products (ETPs), citing significant risks as the rationale.
The spread of crypto ETPs poses significant risks for individual investors because these products are stated to have insufficient and robust liquidity, and brokers are also said to be exploiting this area:
Brokers mistakenly equated communication to cash on one hand, and made misleading statements about the risks of cryptocurrency on the other. These concerning deficiencies raise increasing concerns that brokers and advisors can now provide retail investors with incomplete and misleading information about Bitcoin ETPs.
Paul Grewal: The evidence shows the opposite!
The person who responded to the Senators’ call to block ETPs on social media was Coinbase’s Chief Legal Officer, Paul Grewal.
Paul Grewal clearly indicated that the available evidence shows the opposite of what the Senators claim, pointing out that Ethereum’s spot market has deep liquidity.
Respectfully Senators, the evidence shows the opposite. We discussed our analysis with SEC staff. We’d be happy to do the same for you and other policymakers with questions. Not just Bitcoin, but many crypto commodities exhibit market quality measures that surpass leading stocks. For example, Ethereum’s spot market is deep and liquid; only two S&P 500 stocks have a higher conceptual dollar volume in trading.
