In its accelerated approval process, the SEC highlighted several key concerns:
Reflecting on Section 6(b)(5) of the Exchange Act, the SEC emphasized the necessity of comprehensive surveillance-sharing agreements with the Chicago Mercantile Exchange (CME) to detect and deter fraud and manipulation. Despite the CME not currently surveilling spot ether markets, the high correlation between futures and spot markets means price manipulations in the spot market could affect the futures market.
To confirm this correlation, exchanges submitted correlation analyses, and the them conducted its own review, examining price data for CME ether futures and spot ETH/USD trading pairs on major platforms like Coinbase and Kraken. The results confirmed a high correlation, supporting the SEC’s confidence in CME’s surveillance capabilities.
Further in its decision, the them analyzed Section 11A(a)(1)(C)(iii) of the Exchange Act to ensure the ether-based ETPs provide sufficient investor protection and market integrity. Key requirements include:
In its final analysis, the SEC addressed additional concerns raised by commenters, including investor protection, environmental considerations, and volatility and risk concerns.
One commenter highlighted ether’s price volatility, arguing that spot ether ETPs could threaten retail investors and the broader financial system by integrating the crypto industry with traditional finance. While the them acknowledged these concerns, it emphasized the broader context of market volatility and potential investor attraction, adhering to the principle of caveat emptor.
However, the them and other supervisory authorities must focus on the broader impact of merging crypto with traditional finance. The gradual blending and introduction of multiple derivative assets could significantly affect the financial system, raising concerns that remain largely unexamined and unaddressed. Ignoring these potential consequences could lead to financial crises similar to 2007-2008 on a larger scale.
With these approvals, the them has taken another significant step towards integrating cryptocurrencies into the mainstream financial system, while maintaining a vigilant stance on market integrity and investor protection.
In its accelerated approval process, the SEC highlighted several key concerns:
Reflecting on Section 6(b)(5) of the Exchange Act, the SEC emphasized the necessity of comprehensive surveillance-sharing agreements with the Chicago Mercantile Exchange (CME) to detect and deter fraud and manipulation. Despite the CME not currently surveilling spot ether markets, the high correlation between futures and spot markets means price manipulations in the spot market could affect the futures market.
To confirm this correlation, exchanges submitted correlation analyses, and the them conducted its own review, examining price data for CME ether futures and spot ETH/USD trading pairs on major platforms like Coinbase and Kraken. The results confirmed a high correlation, supporting the SEC’s confidence in CME’s surveillance capabilities.
Further in its decision, the them analyzed Section 11A(a)(1)(C)(iii) of the Exchange Act to ensure the ether-based ETPs provide sufficient investor protection and market integrity. Key requirements include:
In its final analysis, the SEC addressed additional concerns raised by commenters, including investor protection, environmental considerations, and volatility and risk concerns.
One commenter highlighted ether’s price volatility, arguing that spot ether ETPs could threaten retail investors and the broader financial system by integrating the crypto industry with traditional finance. While the them acknowledged these concerns, it emphasized the broader context of market volatility and potential investor attraction, adhering to the principle of caveat emptor.
However, the them and other supervisory authorities must focus on the broader impact of merging crypto with traditional finance. The gradual blending and introduction of multiple derivative assets could significantly affect the financial system, raising concerns that remain largely unexamined and unaddressed. Ignoring these potential consequences could lead to financial crises similar to 2007-2008 on a larger scale.
With these approvals, the them has taken another significant step towards integrating cryptocurrencies into the mainstream financial system, while maintaining a vigilant stance on market integrity and investor protection.