- VanEck and ARK Ethereum ETF decisions due May 23 and 24, expected rejections due to lack of sufficient data.
- Major financial entities like BlackRock and Fidelity aim to launch Ethereum ETFs despite potential regulatory challenges.
The SEC is poised to make a decision on several Ethereum ETF applications this May. Analyst James Seyffart suggests that the SEC might reject these applications by classifying Ethereum as a security. Finance lawyer Scott Johnsson notes that this potential classification could be a key issue in the SEC’s upcoming decision.
Looks like odds just went up for SEC to deny Ethereum ETFs by claiming #Ethereum is a security. Not a guarantee that they will do this but i think this almost guarantees that the SEC is at least considering it. (not groundbreaking but first i've seen in public SEC documents) https://t.co/JK7M9G9Ttu
— James Seyffart (@JSeyff) May 14, 2024
The SEC has issued notices that it may disapprove these applications based on the argument that the underlying asset, Ethereum, qualifies as a security rather than a commodity. This issue did not arise with Bitcoin ETFs, indicating a distinct regulatory challenge for Ethereum.
“Not a guarantee that they will do this but I think this almost guarantees that the SEC is at least considering it,” Seyffart added.
The SEC’s decision dates for the applications are approaching, with VanEck’s and ARK’s filings set for May 23 and May 24, respectively. Industry observers expect that the SEC will reject these applications due to a lack of direct engagement with the issuers and insufficient supporting data, according to Matt Hougan from Bitwise.
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
Moreover, major financial firms including BlackRock and Fidelity are also attempting to launch spot Ethereum ETFs, demonstrating ongoing interest in Ethereum despite regulatory uncertainties. After winning a legal case against the SEC last year, Grayscale has withdrawn its application for an Ethereum futures product, suggesting a shift away from further legal challenges.
The SEC is currently involved in a legal case with Ethereum supporter ConsenSys regarding whether Ethereum should be classified as a security. However, Larry Fink of BlackRock stated that such a classification would not necessarily prevent the launch of an Ether ETF, showing a commitment to adapting to regulatory outcomes.
As the SEC reviews these Ethereum ETF applications, the decisions made will influence the regulatory landscape for cryptocurrencies and potentially set precedents for how digital assets are treated in the financial sector.
