SEC Chairman Gensler: Ethereum ETF Should Be Fully Approved by September

Author: Jesse Hamilton; Compiler: Baishui, Golden Finance

Summary

• SEC Chairman Gary Gensler said the Ethereum ETF has in fact been approved and all that remains is to finalize the registration details at the staff level.

• Gensler reiterated his complaints about the unregulated cryptocurrency industry, refused to answer whether ETH is a commodity, and argued that the CFTC is not ready to regulate the cryptocurrency market.

• Commodity Futures Trading Commission Chairman Rostin Behnam also spoke about the agency's efforts to ban prediction market election contracts.

SEC Chairman Gary Gensler told senators at a budget hearing on Thursday that final approval for an Ethereum ETF should be completed this summer.

During a hearing to defend the market regulator's budget, Gensler told a subcommittee of the Senate Appropriations Committee that the process was "going well" after initially approving a group of ETFs. The agency previously approved an initial round of applications, but he said the final registration requirements — so-called S-1 filings — are now being processed at a “staff level.”

Once those filings are approved, new ETFs can come to market, opening up a broader market for easily traded funds that hold actual ethereum, much like earlier established spot ETFs that hold bitcoin. The SEC initially blocked applications for bitcoin ETFs until a federal court ruled that the agency had mishandled them, a decision Gensler said the SEC has since followed through on and allowed them.

When asked directly if ETH is a commodity, Gensler did not answer yes or no, instead maintaining his agency’s inconclusive stance on the asset. During the same hearing, Commodity Futures Trading Commission (CFTC) Chairman Rothstein Benham responded, “Yes,” when asked if it was a commodity.

The question is important when trying to find the right agency to regulate various tokens in the U.S. The SEC will regulate security tokens, while the CFTC will have regulatory authority over the rest. While Gensler has repeatedly said the vast majority of digital assets should be considered securities, he declined to specify which assets fit into which basket beyond those listed by his agency in enforcement actions.

“While not all cryptocurrencies are crypto-securities — some fall under Chairman Behnam’s jurisdiction — those that are crypto-securities have an obligation to disclose them to the public,” Gensler said, reiterating his view that most tokens remain unregistered and in violation of securities laws.

Gensler, who has served as chairman of both agencies, said the industry is “flouting” the rules. He also said the CFTC is not currently well-prepared to oversee a disclosure-based supervisory system because, unlike the SEC, it does not do it.

Behnam noted that if the CFTC were to take on more responsibility for regulating cryptocurrency trading, something that legislative efforts in Congress would surely require, it would still lack some of the necessary powers to regulate the cryptocurrency market.

“We don’t have those traditional regulatory tools — registration, custody, monitoring, oversight — that really make the U.S. capital markets and derivatives markets so strong,” he said, adding that the CFTC needs a larger budget to do so.

Behnam was also asked about the popularity of prediction markets from companies like PredictIt, Polymarket, Zeitgeist and Kalshi, and his agency’s stance against contracts that predict election results. His agency recently took action to block such contracts.

“The last thing we need right now is the commoditization of elections,” Behnam said. "In my view, this is a clear violation of existing law and we are taking steps to ensure that they are prohibited."