Enduring a fresh blow to its efforts, Ethereum’s hopes for an Exchange Traded Fund (ETF) have been dashed—increasingly dimming with the SEC’s crypto crackdown. This sudden downturn in expectations reflects the latest regulatory obstacles that cryptocurrencies face, proving that riding the wave of decryption isn’t as easy as one might think.
Industry insiders and issuers of Bitcoin’s successful spot ETFs have expressed a collective skepticism towards the possibility of the U.S. Securities and Exchange Commission (SEC) green-lighting a spot Ethereum exchange-traded fund in the near future.
Ethereum, the global runner-up in cryptocurrency hierarchy, has been under the spotlight for potential ETF approval since SEC Chairman Gary Gensler signaled a nod to multiple Bitcoin ETF applications earlier this year. Major financial entities such as BlackRock, Fidelity, and VanEck have been eagerly awaiting an opportunity to launch their Ethereum-based products. However, the prevailing sentiment is one of cautious optimism at best, with a leaning towards an unfavorable outcome.
During an enlightening discourse at the Paris Blockchain Week, VanEck CEO Jan van Eck conveyed his realistic outlook on the matter. “We were the first to file as well for Ethereum in the U.S., and we, along with [Ark Invest CEO] Cathy Wood, are likely at the forefront for a May decision, which we anticipate might end in rejection,” he remarked in a discussion with CNBC’s Arjun Kharpal.
The SEC’s decision window for VanEck’s Ethereum ETF proposal stretches until late May, setting a precedent for subsequent applications that extend into October. The regulatory ambiguity surrounding Ethereum’s classification as a security, in contrast to Bitcoin’s accepted status as a decentralized commodity, complicates the approval process for Ethereum investors.
SEC Chairman Gensler, in a statement to Yahoo Finance, emphasized the need for a cautious approach, without providing any definitive stance. However, the Commodity Futures Trading Commission (CFTC) has previously indicated its view of Ethereum as a commodity, potentially simplifying the approval pathway, should the SEC align with this perspective.
Jean-Marie Mognetti, CEO of CoinShares, voiced his skepticism regarding the approval of a proof-of-stake coin like Ethereum. “I don’t see anything being approved this side of the year,” he predicted during another CNBC interview. The proof-of-stake model, which underpins Ethereum’s blockchain, could potentially align more closely with the characteristics of a security, given the influence and rewards accruing to significant stakeholders.
The allure of an Ethereum ETF lies in its potential to broaden investor access to the cryptocurrency, facilitating indirect purchases and trades. This development would necessitate issuers holding sufficient Ethereum to ensure a balanced trading volume, a prospect that enthusiasts believe could enhance the currency’s scarcity and value.
While Ethereum futures ETFs have received approval, this doesn’t necessarily pave the way for a spot ETF endorsement. Drawing parallels from Bitcoin’s ETF journey, the interval between the first futures and spot ETF approvals was two years—a timeline that could suggest a prolonged wait for Ethereum’s spot ETF proponents, assuming historical patterns hold true.
As the SEC continues its rigorous examination of cryptocurrency-related financial products, the community awaits with bated breath, hopeful yet realistic about the challenges that lie ahead in securing a spot for Ethereum in the ETF landscape.
