tl;dr
Market participants, including BlackRock, Fidelity, and VanEck, are uncertain about the SEC's approval of Ethereum ETF products, as SEC Chairman Gary Gensler's emphasis on crypto assets subject to federal securities laws complicates the outlook for Ethereum ETFs. VanEck and CoinShares CEOs anticipat...
Uncertainty Looms for Ethereum ETFs Market participants, including BlackRock, Fidelity, and VanEck, are uncertain about the SEC's approval of Ethereum ETF products, as SEC Chairman Gary Gensler's emphasis on crypto assets subject to federal securities laws complicates the outlook for Ethereum ETFs. VanEck and CoinShares CEOs anticipate a rejection of their Ethereum ETF applications, expressing pessimism about near-term approvals, especially for proof of stake protocols specific to Ethereum, which the SEC has reservations about. The SEC's decision-making process, similar to that of Bitcoin ETFs, remains uncertain, while issuers of spot Bitcoin ETFs prepare for the outcome and navigate the regulatory landscape to offer investment products tied to Ethereum.
According to a CNBC report, spot Bitcoin exchange-traded funds (ETFs) issuers have expressed skepticism that the US Securities and Exchange Commission (SEC) will approve similar spot Ethereum ETFs. Market participants, including asset managers BlackRock, Fidelity, and VanEck, eagerly await approval for Ethereum ETF products, but some issuers are uncertain about the SEC’s green light.
Uncertainty Looms for Ethereum ETFs
The report notes that SEC Chairman Gary Gensler’s emphasis on crypto assets subject to federal securities laws has further complicated matters for an Ethereum ETF. Gensler has asserted that most crypto assets are investment contracts, consistent with the SEC’s perspective.
Interestingly, VanEck CEO Jan Van Eck anticipates a rejection of their Ethereum ETF application, stating that regulators have been providing comments on the application for weeks. Van Eck believes that the SEC’s decision-making process is similar to that of Bitcoin ETFs, where prolonged reviews eventually lead to approval. However, the outlook for Ethereum ETFs remains uncertain. VanEck CEO further noted:
"We were the first to file as well for Ethereum in the U.S., and we and Cathy Wood, are kind of the first in line for May, I guess, to probably be rejected."
CoinShares CEO Jean-Marie Mognetti shares this pessimism, stating that he doesn’t foresee any approvals shortly, especially for proof of stake protocols specific to Ethereum.
Proof of Stake Protocol Complicates SEC Decision?
The SEC’s acceptance of proof of work (PoW), the protocol underlying Bitcoin, has not raised securities law concerns as the largest cryptocurrency has been deemed a commodity by US regulators led by Gensler. However, the proof of stake (PoS) that is central to Ethereum poses a challenge to the approval of Ethereum ETFs, which, as Bitcoin has continuously witnessed, opens the door for traditional financial institutions to increase adoption and offer these products to a greater number of investors in the US.
While Bitcoin relies on volunteer miners to validate transactions and create new tokens, Ethereum’s proof of stake protocol is based on participants staking their existing tokens to secure the network.
The SEC’s reservations about this protocol are another obstacle to the approval of the Ethereum ETFs, as highlighted by CoinShare’s CEO, who further stated, "I don’t see anything getting approved this side of the year."
Ultimately, market participants are eagerly awaiting the SEC’s decision on whether to approve or disapprove Ethereum ETFs, while issuers of spot Bitcoin ETFs are preparing for the outcome and navigating the regulatory landscape to offer investment products tied to Ethereum. It’s worth noting that the SEC has a May deadline to complete its review of Ethereum ETF applications after already pushing back its original March decision deadline.
The daily chart shows that ETH’s price is trending downwards. Source: ETHUSD on TradingView.com
The price of ETH stands at $3,518, reflecting a 2.5% decrease within the last 24 hours. This decline extends the downward trend observed over the past 30 days, resulting in an accumulated drop of nearly 10%. Featured image from Shutterstock, chart from TradingView.com
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