Uncertainty Surrounds Approval of Ethereum ETFs in May
Approval for spot Ethereum (ETH) ETFs in May appears increasingly uncertain, with indications from Alex Thorn, who heads firmwide research at Galaxy Digital.
Recent reports reveal that the Securities and Exchange Commission (SEC) has been issuing subpoenas to crypto firms regarding their connections to the Ethereum Foundation. At the same time, the SEC’s lack of active involvement with ETF applicants just two months before the initial deadline casts doubts on the likelihood of approval in May, Thorn noted in a recent statement.
A report from Fortune suggests that the SEC is intensifying its legal efforts to classify Ethereum (ETH) as a security, citing investigations targeting U.S. companies. Similarly, The Block reported this week that the Ethereum Foundation received a confidential inquiry from an unspecified state authority, leading to the removal of the “warrant canary” from its website.
Thorn, who brings experience from Fidelity Investments, speculates that the SEC’s interest in crypto firms’ interactions with the Ethereum Foundation could involve investigating whether Ethereum’s initial coin offering (ICO) in 2014 violated securities regulations.
He suggests that while the SEC might differentiate between the ICO and current ETH trading, taking enforcement action against the Ethereum Foundation nearly a decade later would be highly irregular.
SEC Chairman Gary Gensler has refrained from commenting on the classification of ETH as a security. However, reports indicate that the SEC views Ethereum’s 2022 “Merge” upgrade as potentially increasing the likelihood of ETH being considered a security due to the transition from proof-of-work to proof-of-stake consensus mechanism. Despite this, the SEC allowed the launch of several futures-based Ethereum ETFs in 2023, a year after Ethereum’s transition to proof-of-stake.
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Thorn argues that any potential SEC action alleging securities violations against ETH or the Ethereum Foundation would pose significant legal challenges and could have far-reaching implications for the industry.
Thorn’s perspective echoes the skepticism of market experts regarding the approval of a spot Ethereum ETF by May. Bitwise CIO Matt Hougan recently suggested that delaying approval might be advantageous, allowing the market to absorb spot bitcoin ETFs before focusing on a new offering. He anticipates that delayed approval could attract even more assets.
Alexander Stefanov
Reporter at CoinsPress
Alex is an experienced finance journalist and a cryptocurrency and blockchain enthusiast. With over five years of experience covering the industry, he deeply understands the complex and constantly evolving world of digital assets. His insightful and thought-provoking articles provide readers with a clear picture of the latest developments and trends in the market. His passionate approach allows him to break down complex ideas into accessible and insightful content. Follow up on his content to be up to date with the most important trends and topics - stay ahead of the curve with CoinsPress.
