Will the U.S. SEC Forgo ‘Security’ Concerns to Approve Spot Ethereum ETF?

When the U.S. SEC requested issuers of spot Ethereum ETFs to submit their 19b-4 filings, the market reacted strongly, suggesting that the likelihood of approval had significantly increased. Previously, uncertainty surrounding Ethereum’s ‘security’ status has been a significant hurdle for ETF approval. However, the SEC’s request for 19b-4 filings raises the question of whether the regulator is now prepared to overlook these earlier concerns.

SEC May Differentiate Between ETH and Staked ETH

Galaxy researcher Alex Thorn has weighed in on the speculation surrounding the SEC’s stance on Ethereum ETFs. Thorn suggests that if the SEC is considering a reversal, they might distinguish between Ethereum (ETH) itself and staked Ethereum (stETH) or “staking as a service ETH” as securities.

Thorn notes that this approach could align with the SEC’s ongoing court cases and investigations, potentially allowing the approval of Ethereum ETFs while maintaining the agency’s previously stated opinions. This nuanced differentiation could pave the way for regulatory acceptance of Ethereum ETFs.

if the speculation about a 180 from SEC on the ethereum ETFs is true, i would guess they try to thread a needle between “ETH” NOT being a security and “staked ETH” (or even more flimsily, “staking as a service ETH”) as BEING a security.

that would be somewhat congruent with…

— Alex Thorn (@intangiblecoins) May 21, 2024

Crypto investor Anthony Pompliano has stated that the approval of an Ethereum ETF would mark a pivotal moment for the cryptocurrency industry. “If they approve the Ethereum ETF, they are approving the entire industry,” Pompliano remarked, suggesting that such a decision would break the final barrier to widespread regulatory acceptance.

However, questioning his euphoria surrounding the approval of spot Ether ETF, crypto enthusiast @AdamAssets writes: “I can’t imagine. ETH foundation so blatantly bucked at securities laws. Literally free pass for anyone to sell unregistered investment contracts from that point forward”.

ETH Price Action

Although the Ethereum price has rallied by over 20% in the last 24 hours, the volatility will continue until there’s an official statement from the SEC.

QCP Capital noted that if the SEC approves the spot Ether ETF, the ETH price can easily rally past $4,000 and even further to $5,000. However, in the case of a denial, it could slip to $3,000.