Ether Likely Recognized as Commodity, Paving Way for Spot ETFs Approval: Bloomberg Analyst
Summary:
The US securities regulator, the SEC, indirectly recognized Ether as a commodity when approving Ethereum futures exchange-traded funds (ETFs) last year, according to Bloomberg ETF analyst James Seyffart. This could pave the way for a spot ETF version this year. The first Ether futures ETFs in the US were listed in October, and Seyffart suggests that the SEC designating Ether as a security could lead to legal disputes and potential de-listings of futures ETFs. He anticipates a final decision on spot Ethereum ETFs like those of VanEck, ARK 21Shares and Hashdex in May 2024, and expects $10 billion to be invested in Bitcoin ETFs within the next 12 months following presumed approval by January 10.
Ether (ETH) was apparently recognized as a commodity by the United States securities authority last year when it gave the green light to Ethereum futures exchange-traded funds (ETFs). As per the Bloomberg ETF analyst James Seyffart, this paves the way for a spot ETF version to potentially appear in the current year. Seyffart hinted at the Ethereum futures ETFs' endorsement in October 2023 during a CryptoQuant webinar on Jan. 4, noting that the Securities and Exchange Commission (SEC) did not dispute the token's categorization in the registration process with the Commodity Futures Trading Commission (CFTC). According to him, the CFTC unequivocally refers to Ethereum as a commodity and not a security. With the endorsement of Ethereum futures ETFs, the SEC implicitly accepts Ethereum futures as commodities futures, he added.
Seyffart believes that the SEC probably didn't have the capacity to challenge the token's categorization. The first Ether futures ETFs in the U.S. were made available on Oct. 2, with several companies introducing a combined total of nine funds on the Chicago Board Options Exchange (CBOE). Firms involved included ProShares, VanEck, Bitwise, Valkyrie, Kelly, and Volshares. Seyffart suggested that if Ether was considered a security, the SEC could end up in court and might have to de-list futures ETFs. The categorization is vital as securities and commodities ETFs have different legal obligations and associated taxes and regulatory loads.
Furthermore, Seyffart pointed out if the SEC determined Ethereum as a security, it wouldn't just be taking on the crypto sector but its counterpart regulator CFTC. He believes this could lead to the potential approval of Ethereum ETFs this year. The SEC has lost a recent court battle where it exempted the SPIKES Index — a stock volatility index — from being classified as security futures, arguing that it encouraged competition amongst similar indices. Seyffart observed that the way these items are registered is of importance due to this precedent. For VanEck, ARK 21Shares and Hashdex’s spot Ethereum ETF, a final verdict from the SEC is expected in May 2024. Other spot Ethereum ETF decisions will follow in the subsequent months. Before these, however, the outcome of spot Bitcoin ETFs has to be declared by the regulator. Seyffart anticipates an approval by January 10, estimating a $10 billion investment in Bitcoin ETFs within the next 12 months.
Published At
1/5/2024 1:49:04 AM
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