Staked Ether May be Classified as Security, Amid Rising Ethereum ETF Approval Hopes
Summary:
Galaxy Research's Alex Thorn expressed concerns that the SEC might classify staked Ether as a security amidst rumors of upcoming Ethereum ETFs approval. He noted that this might align with the SEC's previous positions and ongoing investigations. Furthermore, Thorn addressed additional community worries about potential liquidity impediments of staking Ether in an ETF, and the historical attempts of the SEC to label Ether a security. A considerable increase in Ethereum ETF approval odds was reported by Bloomberg's Eric Balchunas.
Galaxy Research's Chief Research Officer, Alex Thorn, has expressed worry about the possibility of the Securities and Exchange Commission (SEC) designating staked Ether as a security. This uncertainty is fueled by heightened anticipation of the SEC approving Ethereum exchange-traded funds (ETFs) in the near future. Thorn suspects that the SEC might distinguish between Ether, which wouldn't be a security, and stake Ether that could potentially fall under security classification, as they consider approving Ethereum ETFs.
Thorn proposes that such an approval may align with previous legal precedents and ongoing investigative reports, enabling the SEC to maintain its prior articulated positions while green-lighting Ethereum ETFs. Following these remarks, another member of the community expressed concern about possible liquidity challenges if Ether is staked in an ETF, which could potentially conflict with regulatory stipulations.
Thorn responded by noting that the typically observed limits on ETF collateral loans might present useful parallels. He also mentioned that in Europe, exchange-traded products (ETPs) offer staking services. The SEC's ongoing attempts to categorize Ether as a security have been highlighted in a recent report by Eleanor Terret, a Fox Business producer. Terret made use of court files submitted on April 29 by Consensys, suggesting that both SEC and its Chair, Gary Gensler, had considered Ether an unregistered security for at least a year.
On May 20, Eric Balchunas, a seasoned analyst at Bloomberg, suggested that the ups and downs considered, the approval prospects for an Ethereum ETF had risen from a low 25% to a robust 75%. Balchunas attributed this drastic shift to renewed rumors implying a potential SEC stance change on Ethereum ETFs, which he pointed out is becoming a political issue of increasing prominence.
Published At
5/21/2024 11:49:03 AM
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