As the cryptocurrency world anxiously awaits the decision on ethereum Spot Exchange Traded Funds (ETFs) From the United States Securities and Exchange Commission (SEC), much has been said about the variables that could influence the Commission's ruling.
Author and financial lawyer Scott Johnsson enters the discussion and makes an important point: the SEC could consider the security status of ethereum when deciding on exchange products in the coming days, particularly on May 31.
ethereum Security Question Raises Obstacles to Approval
in an x x.com/SGJohnsson/status/1790219759142744195″ rel=”nofollow” target=”_blank”>mailScott Johnsson shared some screenshots that highlight the issue of whether Nasdaq stock market LLC (“Nasdaq” or “Exchange”) has properly submitted its proposal to list and trade iShares ethereum Trust shares under Nasdaq Rule 5711(d). Commodity-based trust shares, given the nature of the underlying assets held by the trust.
Since commodity-based trust shares are defined as a security, the question suggests that the SEC could be classifying eth as a security, representing a potential setback for eth spot ETFs.
While Johnsson believes this is a possibility that is being discussed publicly, he believes it is official proof that the SEC is considering the question of security for eth in the impending spot ETF verdict. This is because this question was never asked when considering the same products for the largest cryptocurrency asset, bitcoin.
The post said:
I am aware that this is widely considered a possibility, but this is your official notice that the SEC is considering the security issue for eth in this upcoming spot ETF order. Please note that this question was never asked (AFAICT) regarding a btc spot/futures ETF product.
According to counsel, 15 USC 78s(b)(2)(B) requires the SEC to notify the reasons for rejection being considered. Although the above question was never asked or observed during a bitcoin Spot ETF filing, was raised for each eth spot ETF filing in their Request for Comments (RFC).
The obvious goal for the SEC to raise this question, according to Johnsson, is perhaps to reject ethereum spot ETFs on the grounds that the filings do not qualify if they contain securities and were incorrectly presented as commodity-based fiat shares.
Johnsson claims that the crypto space at large sees his ideas as a possible reason behind the SEC's action, but there could be more to the development than the community knows.
Final Reviewable Agency Action
Ahead of the May 31 deadline, Johnsson x.com/SGJohnsson/status/1790093611939344488″ target=”_blank” rel=”noopener nofollow”>claims The SEC will most likely provide at least 30 pages of analysis addressing whether or not it believes an ethereum spot ETF complies with Exchange Act regulations. Thus, it will be the last action of the agency that can be reviewed before the deadline.
Additionally, they will have to go beyond the framework they established to approve bitcoin futures and spot products under the Securities Act of 1933 and the restrictions placed on them following the GBTC verdict by the DC Circuit.
Johnsson believes there are several options available to the regulatory watchdog, and each will have far-reaching consequences.
Featured image from iStock, chart from Tradingview.com
