Several issuers are vying for an ethereum spot ETF following the successful launch of btc spot products, but SEC delays and comments from commissioners signal a difficult road ahead.
According technology/us-sec-expected-drag-its-feet-new-wave-crypto-etfs-2024-02-27/” target=”_blank” rel=”noreferrer noopener”>Reuters, the US SEC and ethereum (eth) spot ETF applicants will meet next month to discuss bids for Ether-based investment vehicles. As of press time, the SEC's public filing does not indicate any meetings with the issuers, but the publication cites two people familiar with the matter as sources.
Decisions on Ether-based spot products have been delayed until May at the earliest, with VanEck's filing being the first in line. The SEC must accept or reject VanEck's offer by May 23, while other issuers such as BlackRock, Franklin Templeton Grayscale and Invesco Galaxy wait for a response.
Spot ethereum ETF Offers
eth spot ETF offerings were introduced last year shortly after issuers filed for bitcoin spot ETFs. The SEC approved bitcoin (btc) products and nearly a dozen funds began trading on January 11.
The approval came after more than a decade of rejection by the securities watchdog, with the commission raising concerns of market manipulation as primary reasons for the denial. The SEC also approved futures-based crypto products within that time, and a three-judge panel, including Judge Neomi Rao, found this decision “arbitrary and capricious.”
The ruling issued during a Grayscale lawsuit against the SEC is considered a turning point in the long battle to legitimize mass cryptocurrency adoption and investment in the US, as btc spot ETFs were authorized a few months later.
However, experts have highlighted that eth spot ETFs may receive a different review. A marked difference between bitcoin and ethereum is how the SEC views both products. Following the timely approval of the btc ETF, SEC Chairman Gary Gensler referred to bitcoin as a non-security product, but ethereum's security designation remains ambiguous.
Furthermore, both blockchains operate with divergent technological models. bitcoin uses proof of work and ethereum moved to a proof-of-stake design in 2022. This model allows eth holders to stake assets in exchange for performance, a process frequently scrutinized by the SEC and used as a lightning rod by the regulator. The regulator suggests that Existing financial policies are sufficient for the supervision of cryptoassets.
Furthermore, the SEC has not opened a dialogue with issuers as the commission did in the previous period to detect btc ETF approvals. Gensler has said that all five commissioners will vote on the offerings, but stressed that previous decisions do not indicate widespread crypto support.
Commissioner Hester Peirce commented that the SEC shouldn't need a court case to force it, while Grayscale CEO Michael Sonneshein said it's too early to know if the crypto investment firm will have to sue the SEC again.
crypto industry stakeholders such as Coinbase have asked the SEC to greenlight Grayscale's eth spot ETF application, which seeks to convert a $7 billion trust into an exchange-traded fund. The crypto exchange also petitioned the SEC for more transparent crypto rules.
Amid efforts to get the SEC to approve Ether ETFs that track spot prices, eth is up more than 42% in the last 30 days according to CoinMarketCap. Grayscale experts believe that eth ETF hype has contributed to this rally, but they linked the rise to anticipation around the Dencun upgrade.
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