The Securities and Exchange Commission (SEC) finds itself once again in the spotlight, this time concerning the approval of Ethereum ETFs amidst its recent nod to bitcoin ETFs. While bitcoin celebrates regulatory clearance, Ethereum’s fate hangs in the balance, leaving investors in suspense.
While the SEC swiftly approved bitcoin ETFs, the path for Ethereum ETFs appears more convoluted. Analysts note the SEC’s cautious approach, causing uncertainty about approval timelines and investor confidence.
Paul Grewal’s commentary sheds light on Ethereum’s classification and suitability for ETFs. Highlighting Ethereum’s journey since 2015 and its recognition as a commodity by senior SEC officials, Grewal argues against its classification as a security, citing its parallels with bitcoin and compliance with regulatory tests.
Moreover, he pointed out that even recent SEC trial lawyers compared ETH to Bitcoin (BTC), proving its standing as a commodity. Grewal also referenced the classification of ETH as a commodity by the CFTC and that ETH futures contracts have been trading on CFTC-regulated exchanges since 2021.
He concluded his posts by stating that ETH doesn’t meet the Howey test criteria, which is crucial for deciding if an asset is a security. He argued that ETH wouldn’t be considered a security even under the Howey test. He urged the SEC to stick to its stance on ETH and avoid creating excuses to reject Ethereum ETF applications, stressing the need for fair and transparent rules for investors and the crypto market.
The SEC has postponed its verdict on several applications, including those from Ark Invest, Hashdex, Grayscale Investments, and BlackRock Inc., regarding the approval of Ethereum ETFs. VanEck’s proposal is slated for a final decision on May 23.
The biggest breaking point in delaying the decision lies in the SEC questioning whether Ethereum qualifies as a security or a commodity. Sumit Roy from etf.com notes that while Ethereum exhibits characteristics of both, the SEC appears hesitant to classify it definitively. Instead, it may prefer legal clarity on the matter before deciding.
SEC is open to public comments on concerns related to market manipulation and fraud, echoing issues that blocked the swift approval of spot bitcoin ETFs.
It’s Been a Rollercoaster!
Despite the bullish sentiment, Ethereum’s price has experienced recent volatility. While it surged 40% year-to-date, the past week saw a downturn, with prices dropping below $3,300 and an overall decline of 12% in the last five days.
Read More: Bitcoin ETFs Secure 175,000 BTC: Here’s What To Expect Next?
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