On March 27, VanEck advisor Gabor Gurbacs voiced his apprehensions about the inadequacy of contemporary cryptocurrency regulations and their detrimental impact on innovation.
His concerns were fueled by the instability within the crypto industry, particularly in response to the regulatory environment. This sentiment was underscored by the US Securities and Exchange Commission (SEC) postponing its potential approval of VanEck’s spot Ethereum ETF application.
The VanEck advisor contends that regulations prioritize political and personal interests.
In a post on X, Gurbacs expressed his discontent, emphasizing the extent to which ineffective regulatory frameworks by relevant authorities limit innovations and contribute to a negative economic outlook.
I am personally unhappy with how regulators in developed markets managed the first decade of digital asset regulation. They manage to simultaneously enable scammers, hamper actual innovation and protect incumbents on the expense of those building better systems.
— Gabor Gurbacs (@gaborgurbacs) March 27, 2024
The VanEck advisor’s expressed concern emerged shortly after the SEC’s announcement of the postponement of VanEck’s spot Ether ETF application on March 20.
Gurbacs also highlighted the concerning proliferation of scammers within the blockchain sector, which has unfortunately emerged as a fertile ground for fraudulent activities.
His observation resonates with findings from Chainalysis’s 2024 crypto crime report, revealing that illicit crypto addresses amassed a staggering $24.2 billion in 2023.
Furthermore, the advisor pointed out that while there may be a few outliers to his critique, regulators are urged to take proactive measures by establishing and enforcing new frameworks aimed at fostering the development of future markets.
There are of course a few exceptions to this. I am grateful to have worked with a number of bright regulators over the past decade on matters that seemed impossible then but now it’s a reality. Still the fact is a fact: lots more work to do to build the markets of tomorrow.
— Gabor Gurbacs (@gaborgurbacs) March 27, 2024
“In the current economic climate, prioritizing personal or political agendas and unnecessary bureaucratic hurdles over national interests and capital formation is unacceptable and indefensible,” he stated.
It’s not excusable or tolerable to prioritize personal/political interests and senseless bureaucracy over national interests and capital formation. Not ever but particularly not in the economic condition where the world is now.
— Gabor Gurbacs (@gaborgurbacs) March 27, 2024
Meanwhile, two events reinforcing Gubarcs’ concerns include the Department of Justice’s indictment against the KuCoin exchange and the Securities and Exchange Commission’s settlement with Binance.
On March 26, federal prosecutors in Manhattan filed charges against KuCoin and two of its founders, Chun Gan and Ke Tang. They were accused of violating US anti-money laundering laws and operating an unlicensed money transmitting business.
GET OFF OF @kucoincom 🚨
PROMINENT GLOBAL CRYPTOCURRENCY EXCHANGE KUCOIN AND TWO OF ITS FOUNDERS CRIMINALLY CHARGED WITH BANK SECRECY ACT AND UNLICENSED MONEY TRANSMISSION OFFENSES: DOJ
— RenderM₳mi Top #7⭕️ (@RENDERMAMI) March 26, 2024
Some analysts and market participants speculate that the recent lawsuit may lead to a substantial settlement, similar to what occurred with Binance.
It’s worth recalling that in 2023, the SEC accused Binance of various infractions, including fraud, anti-money laundering (AML) violations, and selling unregistered securities, culminating in a federal resolution charge of $4 billion against the exchange. However, it’s important to note that Binance isn’t the only crypto exchange under scrutiny by the SEC – Coinbase faced legal action just a day after Binance.
While federal charge settlements might seem like appropriate penalties for large corporations, the VanEck advisor argues that current crypto regulations exhibit bias.
VanEck, like others, joins the queue awaiting the SEC’s approval.
The SEC’s delay in announcing its decision regarding VanEck’s spot Ether ETF proposal has placed the asset manager in a queue alongside other entities such as Grayscale, Fidelity, BlackRock, Ark 21 Shares, Hashdex Nasdaq Ethereum ETF, and the Invesco Galaxy Ethereum ETF.
Experts interpret these postponements as indicative of the SEC exercising caution in approving cryptocurrency-based ETFs.
[PN] SEC DELAYS HASHDEX ETHEREUM ETF
NOTICE OF DESIGNATION OF A LONGER PERIOD FOR COMMISSION ACTION ON PROCEEDINGS TO DETERMINE WHETHER TO APPROVE OR DISAPPROVE A PROPOSED RULE CHANGE TO LIST AND TRADE SHARES OF THE HASHDEX NASDAQ ETHEREUM ETF UNDER NASDAQ RULE 5711(I) (TRU
— Phoenix » PhoenixNews.io (@PhoenixTrades_) March 19, 2024
The speculation regarding the approval of a spot Ethereum ETF has sparked debate. However, recent optimism surrounding crypto ETFs has waned, as Bloomberg ETF analyst Eric Balchunas has adjusted his previous predictions of potential approval by May 23, now deeming it uncertain.
Ether ETFs Probably Won't Be Approved in May
Although the SEC approved spot Bitcoin ETFs in January, approval of an Ether-backed product in May seems unlikely.Bloomberg ETF analyst James Seyffart thinks regulators will reject spot ETH ETFs on May 23.
“My cautiously optimistic…
— secondbuy (@secondbuy_de) March 20, 2024
In the meantime, a local news report has hinted at the US regulatory agency’s intentions to categorize ETH as a security. Subsequently, the agency has issued subpoenas to three companies for an investigation into the Ethereum Foundation, the entity responsible for the Ethereum blockchain network.
🚨🚨🚨
ETHEREUM FOUNDATION SUBPOENAED FOR THE FIRST TIME IN ITS HISTORY; ETF REJECTION INEVITABLE?NFA; read below for my analysis and opinion
The Facts
– The foundation has removed the Warrant Canary from its website, indicating in a Github repository that they have been… pic.twitter.com/gVUQ8j1GKL— huss 🌊 🟦 (@Husslin_) March 20, 2024
Although the SEC had greenlit 11 Bitcoin ETFs earlier this year, Ethereum ETFs could face regulatory hurdles.
Nevertheless, VanEck and other stakeholders await the approval of Ethereum ETFs with anticipation, mirroring the trajectory of Bitcoin ETFs, which boast an impressive on-chain holdings record of $57 billion, constituting 4.17% of the current BTC supply.
