SEC seeks public input on proposed spot Ether ETFs

abdelaziz Fathi

The Securities and Exchange Commission (SEC) is seeking public comments on a trio of proposed spot ether exchange-traded funds (ETFs), as per recent regulatory filings.

The ETFs in question include the Fidelity Ethereum Fund, Grayscale Ethereum Trust, and Bitwise Ethereum Trust. On Tuesday, the SEC issued a notice specifically regarding the Bitwise proposal, stating, “The Commission is publishing this notice to solicit comments on the proposed rule change, as modified by Amendment No. 1, from interested persons.” The public has been given a 21-day period to submit their comments on all three proposed ETFs.

However, the mood surrounding the potential for the SEC’s approval of these spot ether ETFs has notably shifted. Once buoyed by optimism, the sentiment has taken a downturn. Bloomberg ETF analyst Eric Balchunas revised his expectations for approval by May from an initial 70 percent to a now more conservative 30 percent.

Further dampening hopes, James Seyffart, another ETF analyst at Bloomberg, voiced his concerns following the SEC’s call for comments on Fidelity’s filing. Seyffart noted, “Nothing in the filings signal to me that anything has changed. Silence from the agency isn’t a good thing here,” indicating a perceived lack of progress towards approval.

The SEC has been intensifying its efforts to classify Ethereum, the world’s second-largest cryptocurrency, as a security. The regulators issued a series of subpoenas to U.S. companies, focusing particularly on their interactions with the Ethereum Foundation, a nonprofit organization responsible for overseeing the blockchain’s governance and development. The move raised concerns within the crypto industry, particularly following hopes that the SEC’s recent approval of Bitcoin ETFs would pave the way for Ethereum ETFs by major financial players like BlackRock.

The investigation into the Ethereum Foundation, especially following Ethereum’s transition to a “proof-of-stake” governance model in September 2022, signals the SEC’s ongoing scrutiny of the crypto space. This shift away from the “proof-of-work” model, akin to Bitcoin’s, to a more energy-efficient system involving a network of validators, has provided the SEC with new grounds to explore Ethereum’s classification as a security.

The broader regulatory landscape for the crypto industry has been caught between the SEC’s oversight ambitions and the commodities framework applied by the Commodities and Futures Trading Commission (CFTC) to assets like Bitcoin.

Ethereum’s regulatory status has been a matter of speculation and discussion for years. In 2018, SEC officials suggested that Ethereum might not constitute a security, a stance that appeared to shift under Gensler’s leadership, especially after Ethereum’s adoption of the proof-of-stake model. Gensler’s comments in 2023 implied that proof-of-stake-based cryptocurrencies might fit the definition of investment contracts, hinting at a possible security classification, though without directly naming Ethereum.

SEC Chair Gary Gensler has made it clear that the agency’s decision on bitcoin ETFs is specific to bitcoin and should not be interpreted as a broader acceptance of other cryptocurrency products.

Read this next

Chainwire

Velocity Labs and Ramp Network facilitate fiat to crypto onramp on Polkadot via Asset Hub support

Velocity Labs is proud to announce a fiat to crypto onramp using Ramp Network through the integration of Asset Hub. Through it, Ramp will be able to service any parachain in the Polkadot ecosystem.

Executive Moves

INFINOX hires Mayne Ayliffe as Global Head of HR

“I look forward to working with our teams around the world to develop a strategic HR agenda that supports high performance and is centred on human motivation.”

Fintech

Sterling to provide risk and margin support for fixed income

“Firms must have the tools to effectively manage their risk across all asset classes. As yields rise, we see more exposure from clients in the fixed income space. We understand their need to measure and mitigate risk in a highly regulated environment.”

Retail FX

FXOpen launches HK share CFDs: Tencent, Alibaba, Xiaomi, Baidu

Hong Kong share CFDs will be commission-free for a limited period of time.

Retail FX

IronFX Celebrates an Award-Winning Start to 2024 with a Series of Industry Recognitions

IronFX, a global leader in online trading, has embarked on 2024 with a spectacular display of accolades that highlight its commitment to excellence and innovation in the competitive financial services sector.

Industry News

FIA urges CFTC to regulate use cases rather than AI itself

“We urge the CFTC to refrain from crafting new regulations that generally regulate AI because this approach presents certain well-known pitfalls. By approaching the issue from the perspective of AI as a technology, rather than the use case for the technology, corresponding regulations would likely necessitate a definition of AI. We anticipate that any attempt to properly define AI would be very challenging and require considerable resources.”

Education, Inside View

The Power of Public Relations in Finance: Shaping Perceptions & Building Reputation

It’s safe to say that the finance industry has faced its share of reputation crises over the years, from the 2008 financial collapse to the many scandals around irresponsible lending, political corruption, and even Ponzi schemes. 

Digital Assets

Crossover’s crypto ECN executed over $3 billion in Q1 2024

“Our growth is also driving continued increases in the percentages of trades that are ‘Order Crossing Order’ (OXO). Currently, roughly 10% of all trades executed on CROSSx are OXO, another differentiator in our platform’s capacity. This capacity and our unique execution model provide value to both the market maker and taker, as evidenced by our commercial model.”

blockdag

BlockDAG’s Explosive Presale Hits $20.3M In April Swaying Investors From XRP’s Price Trends Upward, & Polygon’s NFT Market

Learn about BlockDAG’s impressive $20.3M presale results, XRP’s price increase prospects, and the booming NFT market on Polygon among the top 10 cryptocurrencies.

<