Currently, seven ETH spot ETF applications are awaiting SEC review, with VanEck leading the queue.
Reporting on the timeline for the approval process, Terrett’s insights showcase a spectrum of opinions from ETF issuers, investment management firms, and sources close to the US Securities and Exchange Commission (SEC).
Conflicting Views on Ethereum ETF Approval
According to Terrett, one issuer of a Bitcoin Spot ETF with an Ethereum Spot ETF application expresses confidence. They believe that the approval and smooth launch of Bitcoin spot ETFs will create a favorable environment for the SEC to approve Ethereum spot ETFs.
On the other hand, an alternative source suggests a “hard no” from the SEC at present, citing internal resistance within the SEC to the idea of approving Ethereum spot ETFs. Another source points to the listing of Ethereum futures ETFs and BlackRock Inc‘s (NYSE: BLK) successful track record in ETF approvals as catalysts to greenlight the product. This source anticipates the launch of Ethereum spot ETFs by the end of the summer.
✨One $BTC Spot ETF issuer with an ETH Spot ETF application says they’re confident the…
— Eleanor Terrett (@EleanorTerrett) January 23, 2024
Crucially, the ambiguity surrounding SEC Chairman Gary Gensler’s stance on Ethereum’s status as a potential security adds a layer of uncertainty. However, a source believes that the classification of ETH as a commodity by the CFTC and Ripple’s court victory with XRP may make it challenging for Gensler to label most digital assets as securities.
Currently, seven ETH spot ETF applications are awaiting SEC review, with VanEck leading the queue, followed by BlackRock. The looming deadline for VanEck’s application in May 2024 has heightened market expectations for approval.
While liquidity concerns pose a potential obstacle to spot ETH approval, the market remains optimistic, citing the successful navigation of similar challenges for Bitcoin. The transition of Ethereum to proof-of-stake has impacted supply, but the prevailing sentiment is that it represents an outside chance rather than a hindrance.
SEC Commissioner Hester Peirce’s Insights
SEC Commissioner Hester Peirce adds her perspective to the mix, emphasizing the need to avoid repeating delays seen with Bitcoin ETFs. Peirce asserts that the SEC is expected to approach the approval process for crypto-backed ETFs with the same regular considerations applied to other similar products.
She acknowledges the lessons learned from the Bitcoin ETF saga and expresses concerns over the prolonged approval timeline, suggesting that court intervention should not be necessary for the SEC to make informed decisions.
Peirce sheds light on the recent SEC account hack, which led to a fake approval post causing brief market manipulation. She suggests that the SEC’s heightened attention to these approvals may have contributed to the hack and advocates for a more measured approach to avoid unnecessary anticipation.
Turning attention to Ethereum, Peirce indicates that the SEC’s approval process for ETH ETFs will differ from Bitcoin’s, considering the lessons learned. She dismisses the idea that approving spot Bitcoin ETFs signals a shift in how the SEC regulates crypto.