Key Points
- The SEC is reportedly considering labeling Ethereum (ETH) as a security, potentially impacting its ETF approval.
- Communication between ETF applicants and the SEC has been notably lacking, causing concern.
The US Securities and Exchanges Commission (SEC) is reportedly considering whether to classify Ethereum (ETH) as a security, a move that could affect the approval of its anticipated spot exchange-traded funds (ETFs).
Alex Thorn, Head of Research at Galaxy Digital, has indicated that approval for the first list of ETF applications, due in May, is highly unlikely. This pessimistic outlook is largely due to the SEC’s unfriendly stance towards Ethereum, as it reviews numerous applications for an ETH ETF.
SEC’s Stance on Ethereum
The negative sentiment surrounding Ethereum’s ETF approval is fueled by a recent report from Fortune. The report suggests that the SEC is making a significant push to have Ether labeled as a security.
The regulator has reportedly issued subpoenas to several companies as part of an investigation into the Ethereum Foundation. The SEC’s position on Ethereum remains unclear, with high-ranking officials, including SEC Chair Gary Gensler, avoiding the topic of whether Ethereum is a security or a commodity.
The lack of communication between the ETF applicants and the SEC has also been a source of concern. This is a stark contrast to the approval process for Bitcoin ETFs, where the SEC regularly engaged with issuers.
Future of Ethereum ETFs
In January, Standard Chartered bank predicted that an Ethereum ETF would be approved by May 23rd, the final deadline for the first batch of applications. However, as the days pass, the likelihood of this happening seems to be decreasing.
The SEC has also deferred its decision on whether to approve an ETH futures ETF by Grayscale, the world’s largest digital asset manager. Grayscale is also awaiting a decision on its application to convert its ETH trust into a spot ETF.
At the time of writing, Ethereum was trading at $3,347, according to CoinMarketCap, having experienced significant selling pressure in recent weeks.
