According to Coinbase’s analyst, the SEC might reject spot Ethereum funds that allow staking in the near team.
In contrast to the enthusiasm that preceded the approval of spot Bitcoin ETFs, reports over the past few weeks suggest that optimistic expectations for the Ethereum product’s approval have cooled down. Speaking with Bloomberg this week, Katherine Dowling, general counsel for ETF applicant Bitwise, said she anticipates rejection next week due to the lack of public activity typically seen before approval.
“Most people are universally expecting a disapproval order,” Dowling noted. “You’re not seeing the types of public activities that you would see if there was going to be an approval.”
In a CNBC interview, VanEck CEO Jan van Eck also predicted a likely denial. Next week, the SEC’s decision will confirm the fate of VanEck’s and Ark Invest’s filings.
“We were the first to file as well for Ethereum in the US, and we and Cathy Wood, are kind of the first in line for May, I guess, to probably be rejected,” he stated.
Unlike the frequent revisions made to spot Bitcoin ETF applications, there has been minimal back-and-forth between fund companies and the SEC regarding Ether ETFs. People involved in the talks with the securities agency reported that they had braced for a negative outcome.
In the final month leading up to the spot Bitcoin ETF decision, the market buzzed with activity. Fund managers engaged in fierce fee competition, while industry experts placed bullish bets.
Bloomberg ETF analysts James Seyffart and Eric Balchunas have pegged the approval chances for spot Ethereum ETFs at a mere 25%. Seyffart recently expressed skepticism about a positive outcome, saying a nod is “not happening.”
Why might the SEC decide to reject spot Ethereum ETFs?
SEC Chair Gary Gensler has not been vocal about Ethereum ETF filings. However, he has clarified that the approval of spot Bitcoin ETFs does not set a precedent for other crypto ETFs. Concerns about the classification of most cryptos as securities remain a major obstacle to compliance.
According to Scott Johnsson, Van Buren Capital’s general partner, the SEC must provide a clear and detailed explanation if they reject spot Ethereum ETF filings. One potential reason for rejection could be Ethereum’s classification.
The obvious purpose is to potentially deny on the basis that these spot filings are improperly filed as commodity-based trust shares and do not qualify if they are holding a security.
— Scott Johnsson (@SGJohnsson) May 14, 2024
The SEC has not definitively classified Ether, and its decision might hinge on whether it considers Ether a security. If the SEC views Ether as a security, then spot ETFs wouldn’t be allowed under current regulations.
The SEC’s alleged investigations into the Ethereum Foundation and the implications of Ethereum’s staking feature suggest a possible regulatory direction.
The SEC might not approve all spot Ethereum ETF applications at once: Coinbase
Despite the uncertainty, Coinbase’s analyst David Han sees a 30% to 40% chance of approval by month’s end.
He believes the correlation between CME futures and spot exchange rates, which was pivotal for Bitcoin ETF approvals, could similarly benefit Ethereum ETFs.
However, like Johnsson, Han noted that the SEC might focus on Ethereum’s PoS mechanism as a reason for denial since regulations around staking are unclear. He suggested spot Ethereum ETFs enabling staking are unlikely to be approved.
ARK Invest and 21Shares recently amended their S-1 form for the proposed spot Ethereum exchange-traded fund (ETF) by removing the staking component. The move is considered an effort to align the filing with SEC preferences.
The information on or accessed through this website is obtained from independent sources we believe to be accurate and reliable, but Decentral Media, Inc. makes no representation or warranty as to the timeliness, completeness, or accuracy of any information on or accessed through this website. Decentral Media, Inc. is not an investment advisor. We do not give personalized investment advice or other financial advice. The information on this website is subject to change without notice. Some or all of the information on this website may become outdated, or it may be or become incomplete or inaccurate. We may, but are not obligated to, update any outdated, incomplete, or inaccurate information.
Crypto Briefing may augment articles with AI-generated content created by Crypto Briefing’s own proprietary AI platform. We use AI as a tool to deliver fast, valuable and actionable information without losing the insight – and oversight – of experienced crypto natives. All AI augmented content is carefully reviewed, including for factural accuracy, by our editors and writers, and always draws from multiple primary and secondary sources when available to create our stories and articles.
You should never make an investment decision on an ICO, IEO, or other investment based on the information on this website, and you should never interpret or otherwise rely on any of the information on this website as investment advice. We strongly recommend that you consult a licensed investment advisor or other qualified financial professional if you are seeking investment advice on an ICO, IEO, or other investment. We do not accept compensation in any form for analyzing or reporting on any ICO, IEO, cryptocurrency, currency, tokenized sales, securities, or commodities.
See full terms and conditions.
>>> Read full article>>>
Copyright for syndicated content belongs to the linked Source : CryptoBriefing – https://cryptobriefing.com/sec-ethereum-etf-decision-loom/
