Securities and Exchange Commission Chair Gary Gensler suggested the ether ETFs are really already approved and all that remains are the registration details getting hammered out at the staff level.
Gensler repeated his complaints about the noncompliant crypto industry, demurred on answering whether ETH is a commodity and argued that the CFTC isn't ready to police crypto markets.
Commodity Futures Trading Commission Chair Rostin Behnam also addressed his agency's effort to ban elections contracts in the prediction markets.

The final approvals for exchange-traded funds (ETFs) trading Ethereum's ether (ETH) should be finished this summer, U.S. Securities and Exchange Commission Chair Gary Gensler told senators in a budget hearing on Thursday.

Gensler told a subcommittee of the Senate Appropriations Committee in a hearing justifying the market regulator's budget that the process is "working smoothly" after the initial approval of a group of ETFs. The agency had previously granted the initial round of applications but he said the final registration requirements – filings known as S-1s – are now being handled at the "staff level."

Once those filings are approved, the new ETFs can be listed, opening the wider markets to easy-to-trade funds that hold actual ether, much like the earlier establishment of bitcoin spot ETFs that hold (BTC). The SEC had initially blocked the effort for bitcoin ETFs until a federal court ruled the agency was mishandling the matter, and Gensler has said the SEC has since been following that decision and allowing them.

When asked directly whether ETH is a commodity, Gensler didn't respond with a yes or no, maintaining the uncertain position his agency has held on that asset. At the same hearing, when asked whether it's a commodity, Commodity Futures Trading Commission (CFTC) chief Rostin Behnam responded, "Yes."

The question is important when trying to seek the proper U.S. watchdog for various tokens. The SEC will oversee securities tokens and the CFTC will have authority over the rest. While Gensler has repeatedly said the vast majority of digital assets should be considered securities, he refuses to identify which ones fit in which basket apart from those his agency has listed in enforcement actions.

"While not all crypto are crypto securities – some are under Chair Behnam's jurisdiction – those that are have an obligation to disclose to the public," Gensler said, repeating his argument that most of the tokens remain unregistered and are violating the securities law.

Gensler, who has run both agencies as chairman, said that the industry is "thumbing its nose" at the rules. He also suggested the CFTC isn't currently well-prepared to police a disclosure-based system of oversight, because that's not what it does, unlike the SEC.

Behnam noted the CFTC still doesn't have some of the necessary authorities for policing the crypto markets if – as certainly legislative efforts in Congress would direct – it gets more responsibility for overseeing crypto trading.

"We don't have those traditional regulatory tools – registration, custody, surveillance, oversight – that have really made American capital markets and derivative markets so strong," he said, adding that the CFTC would need a bigger budget to make that happen.

Behnam was also asked about prediction markets popularized at such firms as PredictIt, Polymarket, Zeitgeist and Kalshi and his agency's stand against contracts predicting the outcome of elections. His agency recently moved to block such contracts.

"The last thing we need right now is sort of commoditizing elections," Behnam said. "This, in my view, is clearly against existing law, and we're taking steps to make sure they're banned."

UPDATE (June 13, 2024, 16:22 UTC): Adds further comments from Gary Gensler and Rostin Behnam.

Regulations ETF ETH Securities and Exchange Commission

Jesse Hamilton

Jesse Hamilton is CoinDesk's deputy managing editor on the Global Policy and Regulation team, based in Washington, D.C. Before joining CoinDesk in 2022, he worked for more than a decade covering Wall Street regulation at Bloomberg News and Businessweek, writing about the early whisperings among federal agencies trying to decide what to do about crypto. He’s won several national honors in his reporting career, including from his time as a war correspondent in Iraq and as a police reporter for newspapers. Jesse is a graduate of Western Washington University, where he studied journalism and history. He has no crypto holdings.