SEC Approves Ether Spot ETF, Only One Document Away from Official Listing
The U.S. Securities and Exchange Commission (SEC) announced today at 5:00 am Taiwan time, on the evening of May 23rd local time in the United States, that it has officially approved the applications for “Ether Spot ETF” from eight investment institutions, including VanEck, BlackRock, Fidelity, Grayscale, Franklin Templeton, ARK 21Shares, Invesco Galaxy, and Bitwise.
The SEC’s approval of the Ether Spot ETF is the second major milestone for the cryptocurrency industry this year. Although this news seems somewhat unexpected for most people, considering the SEC’s previous negative stance on the Ether Spot ETF, especially after the approval of the Bitcoin Spot ETF earlier this year.
James Seyffart, an analyst at Bloomberg Intelligence, said, “If you had told me a week ago that the Ether Spot ETF could get approval from the SEC, I might have thought you were crazy.”
Although the “19b-4 form” (exchange rule change) for most issuers of Ether Spot ETF has been approved, the issuers still need the SEC’s signature and the completion of the “S-1 registration statement” before the Ether Spot ETF can officially start trading.
Industry analysts suggest that based on past experience, it may take a few more weeks for the completion of the “S-1 registration statement,” and there is no guarantee that they will approve all the S-1 forms submitted by the issuers. However, everything is just speculation, as the current state of the SEC is somewhat unpredictable.
SEC’s Attitude Shift Might Be Mainly Due to Political Factors
Until earlier this week, the outlook for the approval of the Ether Spot ETF applications from issuers was pessimistic, mainly because of the SEC’s negative attitude and avoidance of communication with the issuers.
However, earlier this week, the SEC started to communicate with the issuers and requested them to promptly submit the “19b-4 form” for the Ether Spot ETF, injecting a glimmer of hope into the market. As a result, the price of Ether surged 20% on May 20th, the day the news was released. As of now, the price of Ether has risen from $3,071 at the beginning of the week to $3,800, a 23.7% increase.
It is speculated that the SEC’s change in attitude is mainly due to political factors.
Before the approval, a bipartisan group of congressmen urged the SEC to approve these ETF applications, considering the SEC’s approval of the Bitcoin Spot ETF earlier this year, stating that only by approving the Ether Spot ETF can they demonstrate consistency in standards.
In addition, the day before the SEC approved the Ether Spot ETF, the U.S. House of Representatives also passed the “21st Century Financial Innovation and Technology Act,” which clearly delineates the responsibilities of the SEC and the Commodity Futures Trading Commission, bringing clearer regulatory standards to the cryptocurrency industry. This bill still needs to be passed by the Senate to become law.
Further reading:
What is the “FIT21 Act,” which will be voted on this week to make the United States a cryptocurrency powerhouse?
Ether Spot ETF Approval May Clear Up “Security” Concerns for Cryptocurrencies
The U.S. Securities and Exchange Commission (SEC) has been consistently classifying cryptocurrencies as “securities” in recent years, insisting on regulating them under its jurisdiction and constantly taking enforcement actions against cryptocurrency companies, causing a lot of hardship for industry players.
However, the approval of the Ether Spot ETF this time may indicate that this situation will no longer be seen, as this approval also represents the SEC’s “implicit recognition” that Ether and other similar cryptocurrencies are “not securities.”
James Seyffart, an analyst at Bloomberg Intelligence, said that the Ether Spot ETF is essentially a trust based on a “commodity,” so the SEC’s approval of these ETFs and the approval of the final S-1 forms means that the SEC is explicitly stating that they will not consider Ether as a security, putting an end to the long-standing debate.
By recognizing that “Ether is not a security,” it means that other cryptocurrencies with similar mechanisms to Ether will also be free from the suspicion of being classified as securities, paving the way for the issuance of spot ETFs for these tokens in the future.
However, Seyffart still believes that the SEC may continue to pursue service providers that offer Ether collateral services.
“I think they will try to strike a balance on this issue. The SEC will not call Ether itself a security, but ‘pledging Ether’ may be considered a security. At least in the short term, I don’t think they will abandon this position.”
In the past, the SEC issued Wells Notices to U.S. cryptocurrency exchanges Kraken and Coinbase, as well as Ethereum development company Consensys, with one of the main allegations being “providing cryptocurrency collateral services,” which are unregistered securities services.
Financial lawyer Scott Johnsson also pointed out that the SEC did not explicitly state the non-security status of Ether in this approval and believes that it “completely avoids” this issue, so industry practitioners should not take it lightly.
Sources:
Coindesk, The Block, Cointelegraph, Cointelegraph