Crypto fraud and poor regulation could jeopardize ETF approval

The U.S. Securities and Exchange Commission is expected to make a major decision on the approval ether exchange traded funds next week.

But it will likely fail due to the lack of an overarching regulatory framework for all cryptocurrencies, said Ric Edelman, head of the Digital Assets Council of Financial Professionals.

“I think there will be another slowdown, which honestly isn’t really bad news,” Edelman told CNBC’s “ETF Edge” this week.

Edelman, an investor and personal finance author, believes there should be an emphasis on regulations to protect people from crypto scams. He notes that current laws are more than half a century old and were not built for digital technology.

“Without any police officer, it forces investors to go off on their own outside the investment advisory community because the community can’t help them because we don’t know what the rules are. And they end up in scams and fraud,” he said. “The sad irony is that [SEC Chair Gary] Gensler claims to want to protect consumers. But his refusal to write regulations is hurting rather than helping consumers.”

Matt Hougan of Bitwise Asset Management is also pushing for new rules.

“80-year-old securities laws don’t fit neatly into this 21st century world of digital assets, crypto and technology,” the company’s chief investment officer said. “At the end of the day, I think everyone wants the same thing. They wanted a secure platform where investors are protected and innovation is protected.”

Hougan notes that Bitwise has its own application for a spot Ethereum ETF and is hopeful about the future.

“We have entered the ETF era for crypto. We have the bitcoin ETFs are coming to market. We’ve seen the great things they’ve done for investors: lowering costs, improving regulations, improving safety, security and peace of mind,” Hougan said. “I think we’ll get there on Ethereum as well. ”

The two ether ETF proposals, submitted by VanEck and ARK Investments/21Shares, will be approved or rejected this month.

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