SEC Approves Ether Spot ETF Application from Eight Institutions
The U.S. Securities and Exchange Commission (SEC) has officially approved the applications for an Ether spot ETF from eight investment institutions, including VanEck, BlackRock, Fidelity, Grayscale, Franklin Templeton, ARK 21Shares, Invesco Galaxy, and Bitwise. This approval marks the second significant milestone for the cryptocurrency industry this year, although it came as a surprise to many, considering the SEC’s previous negative stance on Ether spot ETFs after approving a Bitcoin spot ETF earlier this year.
James Seyffart, an analyst at Bloomberg Intelligence, commented, “If you had told me a week ago that an Ether spot ETF would receive SEC approval, I might have thought you were crazy.”
While most issuers have already obtained approval for their Ether spot ETFs’ 19b-4 forms (exchange rule changes), they still need the SEC’s signature and the completion of an S-1 registration statement for the ETFs to officially begin trading. Industry analysts suggest that the completion of the S-1 registration statement may take several weeks based on past experience. However, it is not guaranteed that all issuers’ final S-1 forms will be approved. The SEC’s current stance remains uncertain.
The sudden change in the SEC’s attitude towards Ether spot ETFs may be primarily driven by political factors. Earlier this week, a bipartisan group of lawmakers urged the SEC to approve these ETF applications, emphasizing the need for consistency, given the SEC’s approval of a Bitcoin spot ETF earlier this year.
Additionally, the U.S. House of Representatives passed the 21st Century Financial Innovation and Technology Act, which clearly defines the responsibilities of the SEC and the Commodity Futures Trading Commission. This legislation aims to provide clearer regulatory guidelines for the cryptocurrency industry. The bill still awaits approval from the Senate to become law.
The approval of the Ether spot ETFs may signal a shift in the SEC’s approach to cryptocurrencies as securities. James Seyffart explains that the nature of these ETFs, based on a commodity trust, is likely the reason for the SEC’s approval and the endorsement of the final S-1 forms. This indicates that the SEC explicitly recognizes Ether as not being a security, thus putting an end to a long-standing debate.
Furthermore, the recognition that Ether is not a security removes the concerns of other similar cryptocurrencies being classified as securities. This paves the way for these tokens to potentially launch spot ETFs in the future.
However, Seyffart believes that the SEC may continue to scrutinize service providers offering Ether lending services. He states, “I think they will try to strike a balance on the issue. The SEC will not classify Ether itself as a security, but ‘pledging Ether’ may be considered a security. At least for the time being, I don’t think they will abandon this stance.”
In the past, the SEC issued Wells Notices to U.S. cryptocurrency exchanges Kraken and Coinbase, as well as Ethereum development company Consensys, for providing unregistered securities services related to cryptocurrency lending.
Financial lawyer Scott Johnsson also points out that the SEC did not explicitly address the question of Ether’s non-security status in this approval, suggesting that it “completely sidestepped” the issue. Therefore, participants in the cryptocurrency industry should remain cautious.
Source:
Coindesk, The Block, Cointelegraph, Cointelegraph
