January 24, 2024 at 12:45 GMTModified date: January 24, 2024 at 12:45 GMT
January 24, 2024 at 12:45 GMT

Ethereum ETFs: On the brink of SEC approval?

The cryptocurrency market is rife with speculation regarding the possible approval of spot Ethereum ETFs. This surge in interest follows the recent authorisation of Bitcoin ETFs.

Ethereum ETFs: On the brink of SEC approval?

The cryptocurrency market is abuzz with speculation about the potential approval of spot Ethereum exchange-traded funds (ETFs). This comes in the wake of the recent greenlighting of Bitcoin ETFs, sparking discussions and varied forecasts about Ethereum’s entry into this space.

On 10 January, the US Securities and Exchange Commission (SEC) approved eleven 19b-4 applications for Bitcoin ETFs. These were from major issuers like BlackRock, Ark Invest, and Grayscale.

Spot ETFs allow investors to gain exposure to Bitcoin directly, without the need to hold the cryptocurrency itself.

Recently, a reporter for Fox Business, Eleanor Terrett, shared insights on X (formerly Twitter) about the expectations surrounding the SEC’s decision on Ethereum ETFs.

Her information, gathered from ETF issuers and insiders at the SEC, paints a picture of assertive confidence mixed with cautious scepticism.

Confidence in approval

Some industry players are optimistic about the approval of Ethereum ETFs, especially following the launch of Bitcoin ETFs. 

A company with both a Bitcoin and a pending Ethereum ETF application expressed strong belief in the latter’s approval, citing the precedent set by Bitcoin ETFs.

Another source highlighted Ethereum futures ETFs and BlackRock’s track record as factors that could sway the SEC towards approval, potentially by the end of summer.

The regulatory debate

The status of Ethereum as a potential security remains a point of contention. However, the Commodity Futures Trading Commission (CFTC) views Ethereum as a commodity, and recent legal developments around Ripple and XRP have added complexity to the debate. 

XRP attorney, John Deaton, echoed these sentiments, suggesting that it would be challenging for SEC Chairman Gary Gensler to classify most digital assets as securities.

SEC member Hester Peirce weighed in as well, emphasising the need for the agency to apply standard considerations to these products:

“We need to be applying ‘regular way’ consideration to these products, the same kind of consideration we apply to similar products.”

The other side of the coin

Despite the optimism, some insiders report a firm “hard no” stance from the SEC, said Terrett. There was also some internal resistance to the idea of Ethereum Spot ETFs. 

This resistance stems from ongoing concerns and deliberations within the regulatory body, indicating that the path to approval might not be as smooth as some anticipate.

The SEC’s next move

According to the journalist, the SEC is expected to conduct thorough reviews of S-1 filings for Ethereum ETFs in the coming months, similar to its process with Bitcoin ETFs.

These filings are comprehensive documents that provide detailed information about the proposed ETFs, including their structure, investment strategies, and potential risks. 

The depth and rigour of the SEC’s review process will be a key indicator of its stance on Ethereum ETFs.

Terrett says that the ball is very much in the SEC’s court. The SEC may take several months to analyse the filings, engage with issuers, and consider public comments. 

Ethereum’s market performance

Amidst these discussions, Ethereum’s price has been struggling. 

Recently trading below key support levels, $ETH saw a new weekly low near $2,165 and is currently consolidating losses. 

At the time of writing, the altcoin is trading at $2,240, marking a slight 0.2% increase on the day but still in the red with over a 10% weekly loss.

Most of its technical indicators were also in the negative zones. Both the MACD and Awesome Oscillator emanated red histograms on their respective charts. 

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