Crypto Community On Edge: SEC's Ether Probe Sparks Uncertainty for ETFs

May 15, 2024 at 03:14 PM GST updated: May 15, 2024 at 05:43 PM 2 mins read Crypto Live News

SEC’s March filing raises concerns over Ether’s security status, impacting potential spot Ether ETF approval.
BlackRock’s Nasdaq filing prompts speculation on categorizing Ether ETF as commodity-based trust or security.
Grayscale withdrawal and VanEck’s uncertainty reflect industry apprehension over spot Ether ETF approval.

Recently released information from a March filing with the U.S. Securities and Exchange Commission (SEC) has caused concern within the governing body about Ether’s status as a security. The crypto community has been anticipating for this development to finally come out given that it might indicate the approval of spot Ether exchange-traded funds (ETFs) in the future.

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I'm aware this is widely considered a possibility, but this is your official notice that the SEC is considering the security question for ETH in this upcoming spot ETF order. Note that this question was never (afaict) asked regarding a spot/futures BTC ETF product. pic.twitter.com/TwhqmTnJfC
— Scott Johnsson (@SGJohnsson) May 14, 2024

The important details come from a filing BlackRock made on March 4 to obtain registration for a spot Ether ETF on the Nasdaq. A public opinion poll is included in the document asking if the investment vehicle should be called a commodity-based trust or a security. The goal, according to Davis Polk and Wardwell Associate Scott Johnsson, seems to be to possibly reject the application, citing irregular filings like commodity-based trust shares that might not meet security requirements.

TLDR: the SEC asked commenters re the Eth spot ETFs whether these filers have properly filed their ETF listing proposals as commodities. This shows the SEC is perhaps considering to Eth is a security in their denial. Our odds of approval remain the same: slim to none. Nice job of… https://t.co/g9HGPzGyOp
— Eric Balchunas (@EricBalchunas) May 14, 2024

Bloomberg ETF analyst Eric Balchunas is still skeptical, even though the SEC filing was buried. He thinks there are not many chances for spot Ether ETF approval. Pressure is mounting due to the May 23 deadline for a decision on VanEck’s spot Ether ETF application. This could set a standard for other applications from big companies like ARK 21Shares, Hashdex, Invesco Galaxy, BlackRock, and Fidelity.

Notably, Grayscale dropped its application for a spot Ether ETF on May 7, which could be a sign of regulatory concerns. VanEck CEO Jan van Eck is not sure if their May offering will be approved, which is a feeling that is shared by many in the industry. People in the market and other interested parties are eagerly awaiting the SEC’s decision, both to get regulatory clarity and to learn more about the future of spot Ether ETFs.

Given that the SEC is looking into Ether’s status as a security, spot Ether ETF approvals are not evident. While the government tries to figure out this complex problem, the crypto industry is waiting for guidance since it will have a big effect on investment and innovative concepts.