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Michael Saylor believes they will not launch at all, and even some fund issuers believe they are unlikely to launch this year. Meanwhile, other countries are gaining first-mover advantage.
The battle to launch exchange-traded funds based on ethereum's US spot price is intensifying, and so far the journey appears similar to bitcoin's long, complicated path to approval.
Once again, the United States Securities and Exchange Commission is delaying in providing a definitive response to the applications already submitted. A green light is important because it would allow investors to gain exposure to eth without owning the underlying asset.
Grayscale and Franklin Templeton were due to receive a response from the SEC in April, but the regulator has now pushed back their deadlines to June.
Fidelity and BlackRock have also had similar applications. VanEck and ARK Invest will receive a response later this month, but hopes for approval have quickly diminished.
Because? Because there are signs that the regulator believes that Ether is a security and not a commodity like bitcoin.
A growing dispute
In June 2023, speaking before the House Financial Services Committee, SEC Chairman Gary Gensler declined to say whether he believes eth is a security.
The lack of a clear answer had spooked the crypto industry, especially considering that this contradicted previous guidelines from his predecessor Jay Clayton.
And even before that, at the time of The Merge in September 2022, Gensler had hinted that the staking process could be subject to securities rules.
The status of Ether is important because it determines which organization has regulatory oversight in the US and whether is one security, this could cause big problems for other altcoins.
Consensus recently defendant the SEC and jumped to ethereum's defense, arguing that the commission's “unlawful power grab threatens to undermine the United States' position as the leader of the next generation of the Internet.”
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Saylor's prediction
MicroStrategy CEO Michael Saylor, a strong bitcoin supporter who led efforts to add hundreds of thousands of btc to the company's balance sheet, doesn't think ETFs based on the eth spot price will ever see the light of day. . Speaking at the annual bitcoin for Corporations event, he warned:
“At some point this summer, it will become abundantly clear to everyone that ethereum is considered a crypto asset security, not a commodity. After that, you will see that ethereum, BNB, Solana, Ripple, Cardano (everything on the stack) is just an unregistered cryptoasset value. None of them will ever be included in a spot ETF, none of them will be accepted by Wall Street, none of them will be accepted by mainstream institutional investors as crypto assets. (bitcoin) is the only universal, consensus-accepted, institutional-grade cryptoasset in the world. “There will not be another.”
Michael Taylor
Of course, one could argue that Saylor was obligated to say this, especially considering that he believes btc is the only cryptocurrency that is technically and ethically sound. Speaking at the Istanbul Blockchain Economy Summit in July 2022, he warned that continued Ether upgrades “introduce new attack surfaces” that undermine security and reliability.
What happens next?
The biggest challenge now appears to be the lack of dialogue between the SEC and companies hoping to bring an Ether ETF to the market. As Barron bitcoin-ether-etfs-crypto-sec-a4bfa93f” target=”_blank” rel=””>reported Last month, applicants did not receive “the critical feedback necessary to finalize their products.” By contrast, btc ETF issuers had engaged in a “robust back-and-forth” before their funds began trading.
Jan van Eck, whose eponymous investment firm is awaiting an SEC verdict, speaks candidly bitcoin-etf-issuers-sec-wont-approve-ether-eth-exchange-traded-fund-.html” target=”_blank” rel=””>said CNBC in April that believes the application “will likely be rejected,” while CoinShares' Jean-Marie Mognetti predicted no approvals will occur in 2024.
While the United States continues to be paralyzed by regulatory uncertainty, where the lack of clarity over the status of Ether is exasperating cryptocurrency companies, other jurisdictions are gaining first-mover advantage.
Although trading volumes were quite tepid on the first day, it is still significant that Hong Kong launched an eth ETF, amid speculation that it could one day open the door to mainland Chinese investors.
Like S&P Global recently As noted, funds based on the Ether spot price have already been approved in Canada, Switzerland, Sweden and Germany, with some offering additional yield by also offering staking yields.
Now that ETFs in other territories have billions of dollars in assets under management, the United States risks falling further behind.