An Ethereum (ETH) spot exchange-traded fund (ETF) is expected to enter the U.S. market following the likely approval of several Bitcoin (BTC)-based counterparts next week, as suggested by Bloomberg ETF analyst James Seyffart.
During a private webinar with CryptoQuant on Thursday, Seyffart argued that the Securities and Exchange Commission (SEC) has implicitly acknowledged ETH as a commodity rather than a security, aligning it with the same regulatory category as BTC.
Seyffart pointed out that the SEC has already granted approval for Ethereum futures ETFs, citing the mass approval of funds from VanEck, ProShares, Bitwise, and Valkyrie in August. The inspiration for these applications came after the SEC approved the first leveraged Bitcoin futures ETF in June. This move signaled to the market that regulators might be more inclined to list cryptocurrency products with a higher risk profile, such as Ethereum futures.
James Seyffart highlighted that Gary Gensler, the chairman of the Securities and Exchange Commission (SEC), has refrained from explicitly categorizing Ethereum (ETH) as a security or commodity. However, Seyffart argues that the SEC’s actions, particularly in approving Ethereum futures ETFs, suggest an implicit acceptance of Ethereum futures as commodity futures.
This distinction holds significance because commodities and securities are subject to different regulatory, tax, and reporting requirements, with potentially greater burdens associated with the latter.
While the Commodities and Futures Trading Commission (CFTC), the SEC’s counterpart in market regulation, has long considered both Bitcoin (BTC) and Ethereum (ETH) as commodities, Gary Gensler has been reticent in specifying Ethereum’s classification, avoiding direct responses during interviews.
Notably, the SEC, under Gensler’s leadership, excluded mentioning Ethereum in lawsuits against Binance and Coinbase last year. These legal actions named numerous other cryptocurrencies like Solana (SOL), Cardano (ADA), and Polygon (MATIC) as securities. The nuanced approach to Ethereum in these lawsuits adds to the ongoing debate about its regulatory status within the cryptocurrency landscape.
Likelihood Of ETF Approval
The Securities and Exchange Commission (SEC) has provided limited explicit details on whether it will approve or deny Bitcoin spot exchange-traded fund (ETF) applications from major entities such as BlackRock, Fidelity, and Grayscale. The SEC has only mentioned that it is conducting a “fresh evaluation” of such proposals following its court case loss against Grayscale in August.
Despite the lack of specific information, analysts like James Seyffart suggest a high probability, around 90%, of Bitcoin ETFs being approved early next week due to increased engagement and discussions with applicants in recent months.
While Ethereum ETFs may not have the same level of certainty, Seyffart argues that the SEC would face challenges in denying them. This is because categorizing Ethereum as a security would put the SEC in opposition to their sibling regulator, the Commodities and Futures Trading Commission (CFTC), which has long considered both Bitcoin and Ethereum as commodities. Thus, labeling Ethereum as a security would be a significant divergence from the prevailing regulatory perspective in the crypto industry.
