The cryptocurrency industry is eagerly awaiting May 23, when the US Securities and Exchange Commission (SEC) is scheduled to announce its decision on VanEck's spot ETH exchange-traded fund (ETF) application, followed by ARK 21Shares' decision on May 24.
Apart from VanEck, six other companies, including Ark Investment, Grayscale, Franklin Templeton, Invesco Galaxy, and BlackRock, have submitted applications, although Grayscale withdrew its application at the start of May.
Approval of Ethereum ETFs could lead to increased institutional investment and the entry of major market players. This influx could enhance market liquidity, typically resulting in more stable prices and making Ether more attractive to investors.
Moreover, if ETF providers purchase more cryptocurrency on the open market to meet demand, it could drive up the market price of ETH, similar to Bitcoin's trend in January 2024.
Until recently, the likelihood of approval was considered slim, as noted by Eric Balchunas, an ETF analyst for Bloomberg.
However, on Monday, the analyst mentioned an increase in the probability of spot Ether ETF approval to 75%, up from 25%, based on discussions hinting at a possible reversal by the SEC on this increasingly political matter.
The SEC's push for exchanges to swiftly update their 19b-4 filings suggests potential readiness to approve these applications before an important deadline this Thursday.
Regulators are cautious about Ethereum spot ETFs due to uncertainty over whether Ether or staking ETH should be classified as a security or a commodity. This uncertainty lies at the heart of an ongoing dispute between the SEC and the Ethereum community.
For those unfamiliar, ETFs holding commodities or currencies, such as Bitcoin or gold, are subject to different regulations than those holding securities like stocks, which are more heavily regulated as they represent investments in companies.
According to Fortune, the SEC has intensified its scrutiny of Ethereum, issuing subpoenas to several US companies regarding their interactions with the Ethereum Foundation. In response, ARK and 21Shares have recently revised their
Ethereum ETF application by removing a section on staking. This adjustment is likely aimed at avoiding regulatory complications and improving their approval prospects, although it means forfeiting potential staking rewards.
While many experts remain skeptical about the imminent approval of Ethereum spot ETFs, upcoming US elections and new regulations could influence the outcome in the event of rejection. There's speculation that a victory for Donald Trump could lead to a change in SEC leadership to someone more crypto-friendly than the current chair, Gary Gensler.
JPMorgan analysts, led by Nikolaos Panigirtzoglou, have suggested that the situation might mirror that of Bitcoin: while futures-based Ethereum ETFs have been approved, a potential denial of spot Ethereum ETFs by the SEC could prompt a legal challenge, which the SEC might eventually lose. The analysts proposed the idea of a 'middle' category for Ethereum, neither strictly a commodity nor a security, but something in between.
May 2024, Cryptoniteuae