SEC May Classify Ether as Security, Impacts Future Crypto ETF Approvals
Summary:
The Securities and Exchange Commission (SEC) may classify Ether (ETH) as a security, following a March filing by BlackRock, according to an analysis post by Scott Johnsson. The decision on the spot Ether Exchange-Traded Fund (ETF) by BlackRock has been postponed to June. Other upcoming ETF applications from firms like ARK 21Shares, Hashdex, Invesco Galaxy, and Fidelity could also be affected by the SEC's decision. The regulatory body will decide on the categorization of ETH as a security or a commodity, which is a key factor in these rulings.
The Securities and Exchange Commission (SEC) in the United States might label Ether (ETH) as security, according to details discovered by experts in a March data submission. A blog post by Davis Polk and Wardwell Associate, Scott Johnsson, scrutinized BlackRock's filing from March 4, which pertains to its attempt to launch and trade an Ether-based exchange-traded fund on the Nasdaq. Analysis of the filing showed that the SEC's decision regarding BlackRock's Ether ETF has been delayed until June. The filing also requested public opinion on whether the fund can be classified as a commodity. According to Johnsson, the SEC filing's main objective may be to reject spot filings if they are incorrectly filled out as commodity-based trust shares and are holding a security.
The SEC paperwork, as per Eric Balchunas, an ETF analyst at Bloomberg, was cleverly concealed within procedural language. Despite this, Balchunas still suspects that there is a slim chance the SEC would greenlight a spot Ether ETF. The SEC must reach a verdict on whether to approve or reject VanEck's spot Ether ETF by May 23, a decision with significant implications for many other pending applications.
Should the SEC reject VanEck's request, other applications for spot Ether ETFs from companies like ARK 21Shares, Hashdex, Invesco Galaxy, BlackRock, and Fidelity could face similar outcomes. Grayscale, without giving a reason, scrapped its own Ether ETF application on May 7. Jan van Eck, VanEck's CEO, was earlier skeptical about the SEC approving his company's proposal.
The SEC's verdict hinges on the classification of ETH as a security or a commodity. Despite Chair Gary Gensler consistently declaring that ETH isn't a security in the past, there are rumors that the SEC has initiated an investigation into Ether. Gensler is scheduled to speak at the Investment Company Institute summit in Washington, D.C. on May 23.
Published At
5/15/2024 12:08:32 AM
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