The key moment for the approval of Ethereum spot ETF by the Securities and Exchange Commission (SEC) is about to arrive on the 23rd of this week. The SEC needs to make the final decision on the applications from VanEck, Ark/21Shares on the respective dates of the 23rd and 24th, while the final decision on Grayscale needs to be made by the 30th.
However, the market is not as optimistic as it was before the Bitcoin ETF. Bloomberg reported on the 18th that some fund companies expect their applications to be rejected because the applicants have had less frequent private contact with the SEC compared to the approval of Bitcoin spot ETF in January. Katherine Dowling, the Chief Legal Advisor of Bitwise, who filed the Ethereum spot ETF application, pointed out that the market generally expects a rejection decision.
Will the SEC delay the process?
In response to this, Nate Geraci, the President of ETFStore, tweeted an analysis this morning (20th), stating that the SEC must approve the 19b-4 (Exchange rule change) application and the S-1 (Registration statement) application for the Ethereum spot ETF to be launched. Technically, the SEC could approve the 19b-4, but slow down the execution speed of the S-1, especially considering the lack of active involvement by the SEC.
The biggest problem at the moment is that the SEC has not clearly identified whether Ethereum is a security or a commodity. Scott Johnsson, a General Partner at Van Buren Capital, pointed out that the SEC is still considering this issue in a document dated March 8th.
When conducting a survey on BlackRock’s Ethereum spot ETF application, the SEC asked in a document whether the Nasdaq Stock Market has “considered the nature of the underlying assets held by the trust” and whether the arguments supporting the listing of Bitcoin spot ETF apply to Ethereum, given its PoS mechanism and the concentration of control by a few individuals or entities.
Richard Kerr, a partner at K&L Gates, pointed out that the Ethereum spot ETF is a product based on the 1933 Securities Act and commodities. If Ether is considered a security, the issuer will not be allowed to trade it under this name.
Will there be a lawsuit if it is rejected?
Neena Mishra, the Director of ETF Research at Zacks Investment Research, believes that even if the SEC rejects it, the likelihood of the issuer filing a lawsuit is low. They are more likely to reapply and have more communication with the SEC in the next 240 days.
Related Reports:
Opening to Chinese Investors: CSOP International aims to include Hong Kong Bitcoin and Ethereum spot ETFs in the Shanghai-Hong Kong Stock Connect within 2 years.
Wintermute Market Maker enters Hong Kong! Announces liquidity provision for local Bitcoin and Ethereum spot ETFs.
Michael Saylor: SEC will classify ETH as a security this summer, rejecting the Ethereum spot ETF.