SEC's Alleged Investigation into Ethereum Foundation May Impact Ether ETF Approvals
Summary:
Alleged scrutiny from the U.S. Securities and Exchange Commission (SEC) into the Ethereum Foundation is being interpreted as a strategic assault, which may potentially be used to refuse or stall Ether spot ETFs. Amid these developments, Bloomberg ETF's analysts have decreased their odds of an approved Ether ETF from 70% to 25% by May. The SEC's delayed decision-making on spot Ether ETF applications, impacting firms like BlackRock, VanEck, ARK 21Shares and Fidelity, continues to create uncertainty.
Insiders suggest the alleged scrutiny into the Ethereum Foundation could represent a strategic assault against Ether (ETH), potentially used as grounds to refuse or stall Ether spot ETFs, say sector insiders. As reported by Fortune on March 20, several subpoenas were dispatched to businesses associated with the Ethereum Foundation by the U.S. Securities and Exchange Commission. Inside sources claim the commission is making a concerted effort to define ETH as a security in 2022. The SEC has no valid grounds to reject the ETH ETP proposals, argued Paul Grewal, Coinbase's lead counsel, in reaction to the drama, pointing out that SEC Chair Gary Gensler once confirmed that Ether does not qualify as a security during congressional testimony. Therefore, we're hopeful they won't invent a reason by questioning ETH's long-standing regulatory status, which has been repeatedly approved by the SEC. That isn’t how the law operates. Travis Kling, Chief Investment Officer at Ikigai Asset Management, speculated during a post on March 20 that the recent developments suggest a calculated attack on ETH. We’re not sure what the future holds.
Eleanor Terrett, a reporter for Fox Business, postulated that these subpoenas might be the reason for the securities regulator’s apparent unwillingness to discuss with potential spot Ether ETF issuers. Bloomberg ETF analysts Eric Balchunas and James Seyffart attribute the regulator’s apparent disinterest as a principal reason for their recent reduced prediction of Ether spot approval from 70% to 25% by May. Patrick McHenry, Chair of the House Financial Services Committee, along with others, have openly criticized the alleged action as it opposes the regulator's past decisions. Brian Quintenz, former Commissioner of the Commodity Futures Trading Commission (CFTC), reiterated that last October, the SEC unequivocally confirmed Ether's non-security status when it approved Ether Futures ETFs.
Nonetheless, Cardano's creator, Charles Hoskinson, suggests that after Ethereum transitioned to a proof-of-stake consensus mechanism in September 2022, the SEC might have reconsidered Ether's security status. But Quintenz points out that the SEC would have taken the Ethereum Merge into account when it approved Ether Futures ETFs because the first event preceded the latter one.
If Ether were assigned security status, it would invalidate Ether Futures ETFs listed by CFTC, as any derivative of Ether would then be subject to different regulations as a securities futures contract, Quintenz clarified. The ex-commissioner also highlighted it would be intriguing to observe what, if any, reasons are presented by the SEC if it should delay or reject an ETH ETF, especially since it already advised the market about ETH not falling within its jurisdiction. The SEC has persistently delayed its decisions regarding spot Ether ETF applications, pushing them back to May or a later date. Firms vying for approval include BlackRock, VanEck, ARK 21Shares, Fidelity, Invesco Galaxy, Grayscale, Hashdex and Franklin Templeton. Balchunas and Seyffart currently predict that spot Ether ETFs will be rejected but anticipate approval could be granted before 2025.
Published At
3/21/2024 8:49:11 AM
Disclaimer: Algoine does not endorse any content or product on this page. Readers should conduct their own research before taking any actions related to the asset, company, or any information in this article and assume full responsibility for their decisions. This article should not be considered as investment advice. Our news is prepared with AI support.
Do you suspect this content may be misleading, incomplete, or inappropriate in any way, requiring modification or removal?
We appreciate your report.