Key Points
The crypto community is eagerly waiting for the United States Securities and Exchange Commission’s (SEC) verdict on Ethereum Spot Exchange-Traded Funds (ETFs).
Scott Johnsson, a finance lawyer, has joined the conversation.
He points out that the SEC might take Ethereum’s security status into account when deciding on the exchange products.
Implications of Ethereum’s Security Status
Johnsson shared a few screenshots in an X post.
These images raise the question of whether Nasdaq has correctly filed its proposal to list and trade Shares of the iShares Ethereum Trust.
This is in light of the assets held by the trust.
The Commodity-Based Trust Shares, defined as a security, suggest that the SEC might classify ETH as a security.
This could be a potential obstacle to the spot ETH ETFs.
Johnsson believes that the SEC is officially considering this question for ETH in the upcoming spot ETF decision.
This is because this question was never raised when considering the same products for Bitcoin.
Johnsson points out that the SEC must give notice of the grounds for rejection under consideration, according to 15 U.S.C. 78s(b)(2)(B).
Though this question was never asked for a Bitcoin spot ETF filing, it was raised for every ETH spot ETF filing.
Johnsson suggests that the SEC might reject Ethereum spot ETFs because the filings do not qualify if they hold securities and were filed incorrectly as commodity-based trust shares.
Johnsson believes that there could be more to the SEC’s action than the crypto community is aware of.
Before the deadline on May 31, Johnsson claims that the SEC will provide an analysis addressing if an Ethereum spot ETF complies with Exchange Act regulations.
This will be the last agency action that can be reviewed before the deadline.
They will also have to consider the framework they established to approve Bitcoin futures and spot products under the Securities Act of 1933 and the restrictions imposed on them after the GBTC verdict by the DC Circuit.
Johnsson suggests that the regulatory watchdog has several options, each with far-reaching consequences.
