ethereum is a top performer among the top 10 most valuable coins. At press time, eth is up an impressive 30% and holding steady above $3,700 as bulls break through immediate resistance levels.
The trigger is that the US Securities and Exchange Commission (SEC) will likely approve the first ethereum exchange-traded funds (ETFs) this week or in the coming days.
Why US SEC Approving ethereum Spot ETF Will Be Huge
However, while enthusiasm is high and traders expect further gains, even above $4,100 and all-time highs, the potential approval of this derivative product has sparked a legal debate surrounding the classification of eth.
Jake Chervinsky, a lawyer who frequently comments on crypto issues, x.com/jchervinsky/status/1792924835099668527″ target=”_blank” rel=”noopener nofollow”>took to
Chervinsky points out that this decision would be an important political step by the strict regulator. Over the years, the US SEC has been hesitant to classify any asset besides bitcoin as a commodity.
Any move to approve spot ethereum would move the Commission's hand, indirectly making it endorse eth as a commodity, similar to bitcoin.
It would only make sense. Like the bitcoin spot ETFs issued by, among others, ProShares and Fidelity, the product will track the price of all unstaked eth.
Following the regulator's request to order interested eth ETF spot issuers to modify their applications, analysts note an interesting change.
Combining recent 19b-4 filings filed to the United States by applicants such as Grayscale, issuers continue to classify their shares under the “commodity-based trust shares” rule.
Additionally, Fidelity's application explicitly mentions that your eth will not be staked. Some see this deliberate removal of betting from the equation as a strategic move to satisfy potential regulator concerns about securities classification.
eth staking is a problem for regulators
There are arguments that the US SEC has resisted classify eth as a security due to staking. Being a proof-of-stake network, the performance promise could probably be interpreted such as the network that offers a guaranteed benefit or income.
This feature, in turn, could align eth as a security under the Howey test criteria. In that case, eth would be a security and must be registered with the regulator.
Still, some say Howey's test is outdated, considering ethereum and digital assets in general are emerging asset classes.
Rep. Tom Emmer went to x on May 21 to provide clarity. x.com/GOPMajorityWhip/status/1792967327933407668″ target=”_blank” rel=”noopener nofollow”>saying Continued efforts are being made to achieve legal clarity through the Securities Clarity Act. This legislation aims to establish that a token in itself does not automatically constitute a security.
Featured image from Canva, TradingView chart
