The key moment for the approval of the Ethereum spot ETF by the Securities and Exchange Commission (SEC) is set to take place on the 23rd of this week. The SEC will make its final decision on the applications from VanEck, Ark/21Shares (on the 23rd and 24th respectively), while the final decision on Grayscale’s application will be made on the 30th.
However, market sentiment for the Ethereum ETF is not as optimistic as it was for the previous Bitcoin ETF. Bloomberg reported on the 18th that some fund companies expect their applications to be rejected due to less frequent private communication with the SEC compared to the approval process for the Bitcoin spot ETF in January. Katherine Dowling, the General Counsel of Bitwise, which submitted the Ethereum spot ETF application, pointed out that the market generally expects a rejection.
Nate Geraci, the President of ETFStore, analyzed the situation in a tweet today (20th), stating that the SEC must approve the 19b-4 (exchange rule change) and S-1 (registration statement) applications for the Ethereum spot ETF to be launched. Technically, the SEC could approve the 19b-4 but delay the execution of the S-1, especially considering the SEC’s lack of active involvement.
The biggest issue at the moment is that the SEC has not definitively determined whether Ethereum is a security or a commodity. Scott Johnsson, a General Partner at Van Buren Capital, pointed out that the SEC is still considering this issue in a document dated March 8th. In a document regarding the Ethereum spot ETF application by BlackRock, the SEC asked the Nasdaq Stock Market if they “considered the nature of the underlying assets held by the Trust” and whether the argument for the approval of the Bitcoin spot ETF, considering its PoS mechanism and the concentrated control of a few individuals or entities, applies to Ethereum.
Richard Kerr, a Partner at K&L Gates, stated that the Ethereum spot ETF is a product based on the 1933 Securities Act and commodities. If Ethereum is considered a security, the issuer will not be allowed to trade it under that name.
Neena Mishra, the Director of ETF Research at Zacks Investment Research, believes that even if the SEC rejects the application, the possibility of the issuer filing a lawsuit is unlikely. They are more likely to reapply and engage in further discussions with the SEC within the next 240 days.
Related Reports:
– JPMorgan International: Aims to include Hong Kong Bitcoin and Ethereum spot ETFs in the Shanghai-Hong Kong Stock Connect within 2 years.
– Wintermute Market Maker enters Hong Kong! Announces liquidity provision for local Bitcoin and Ethereum spot ETFs.
– Michael Saylor: SEC will classify ETH as a security this summer, rejecting the Ethereum spot ETF.