Bloomberg’s ETF analyst, James Seyffart, posits that the green light given to spot Ethereum ETFs likely stemmed more from political considerations than purely financial ones.
During an interview’ Rachel Wolfson at Consensus 2024, Seyffart delved into the approval process and timeline for spot ETH ETFs, touching on the 19b-4 rule alteration and the SEC’s involvement.
He hinted at the sway of the political landscape, citing actions by the Biden administration and reactions from the crypto community as pivotal factors in securing the approval.
On May 23, the SEC officially greenlit 19b-4 applications from a slew of entities, including VanEck, BlackRock, Fidelity, Grayscale, Franklin Templeton, ARK 21Shares, Invesco Galaxy, and Bitwise, to issue spot Ether ETFs.
“We see this as primarily a political move. It appears to be a sharp turn from the SEC’s previous stance,” Seyffart remarked.
SEC Didn’t Plan to Approve Spot ETH ETFs
During the interview, Seyffart remarked on the initial skepticism surrounding approval, citing the SEC’s historical hostility and lack of communication.
He noted that the green light marked a departure from the SEC’s typical stance, suggesting a potential shift driven by political pressures.
“I believe the SEC, up until the week prior, was leaning towards rejecting the Ethereum ETFs,” he commented.
“While there’s no concrete evidence pinpointing the exact sequence of events… all signs seem to indicate it. There’s a wealth of circumstantial evidence.”
Seyffart also highlighted the timing of the decision, coinciding with significant political occurrences like Trump’s supportive stance on crypto and bipartisan backing for crypto-friendly legislation.
Seyffart and his colleague, Eric Balchunas, gained recognition in the ETF realm, particularly for their insights into Bitcoin and Ethereum ETFs.
The ETF approval journey involves several stages, including the 19b-4 clearance and scrutiny of the prospectus (S1), which can span several months.
Balchunas and Seyffart revised the odds of spot ETH ETF approval upward to 75%, a significant jump from the previous estimate of 25%, especially after the recent deadline for 19b-4 submissions.
During their discussion, Seyffart anticipated that the Ethereum ETFs could hit the market within weeks, despite the typically lengthy approval process.
“Normally, this process can stretch to five months at its longest. The standard timeline falls between 3 to 4 months,” he explained.
“We anticipate this to move more swiftly, particularly if political factors are in play.”
Other Crypto ETFs Not Likely Says James Seyffart
Seyffart emphasized that the approval of crypto ETFs beyond Bitcoin and Ethereum, such as Solana, is improbable without substantial regulatory adjustments.
He underscored the necessity of a regulated market to oversee these assets and mitigate risks of fraud and manipulation.
In contrast, crypto investor and trader Brian Kelly offered a different perspective, suggesting that Solana could potentially be the next cryptocurrency to secure a spot ETF in the United States.
During a recent segment of CNBC’s ‘Fast Money’, Kelly, also the founder and CEO of the BKCM Digital Asset Fund, posed the question, “So, who’s next?”
He then proposed, “You’ve got to consider Solana as likely the next contender. Bitcoin, Ethereum, and Solana are likely the dominant trio for this cycle.”
