The United States Securities and Exchange Commission (SEC) is considering the approval of a spot Ethereum (ETH) ETF and has called for public input on the matter. Specifically, the SEC is seeking comments on Bitwise Ethereum Trust, Fidelity Ethereum Fund, and Grayscale Ethereum. The court filing states that the proposed rule change aims to enhance competition among market participants and benefit investors and the marketplace as a whole. The SEC is looking to perfect the mechanism of a free and open market while protecting investors and the public interest.
Following the SEC’s approval of several spot Bitcoin ETFs in January 2024, many in the crypto community are hopeful that this move will lead to greater mainstream adoption of cryptocurrencies. Spot Bitcoin ETFs have already exceeded the market capitalization of traditional silver ETFs, with significant inflows in recent weeks. However, SEC Chair Gary Gensler has cautioned that the approval of spot Bitcoin ETFs does not indicate a willingness to approve listing standards for crypto asset securities or the status of other crypto assets under federal securities laws.
Despite the optimism surrounding the approval of a spot Ethereum ETF, experts believe that the chances of approval by May have decreased significantly in recent months. Bloomberg ETF analyst Eric Balchunas estimates the odds of approval at a pessimistic 25%. The lack of communication from the SEC has led to uncertainty and skepticism within the industry regarding the likelihood of approval. It remains to be seen how the regulatory agency will proceed with this decision.
Under Gary Gensler’s leadership, the SEC has maintained an anti-crypto stance, often relying on a regulation-by-enforcement approach rather than establishing a clear regulatory framework. At a recent event, the commission’s Director of its Enforcement Division criticized the crypto sector for significant non-compliance with regulations. However, SEC Commissioner Hester Pierce has expressed dissent within the agency, suggesting that the SEC’s enforcement approach may be deterring potential investors. The ideological divide within the SEC may impact the decision regarding the approval of spot Ethereum ETFs.
In conclusion, the SEC is seeking public input on the potential approval of a spot Ethereum ETF, with a focus on enhancing competition and protecting investors. While the approval of spot Bitcoin ETFs has raised hopes for greater mainstream adoption of cryptocurrencies, experts are less optimistic about the approval of an Ethereum ETF by May. The regulatory divide within the SEC, with conflicting views on enforcement and regulation, may influence the decision-making process regarding spot ETH ETF approval. It remains to be seen how the SEC will approach this issue in the coming months.
