A spot ETF for Ethereum (ETH) is likely to hit the US market next week after a host of Bitcoin (BTC)-based equivalents were given the green light, according to Bloomberg ETF analyst James Seyffart.
During a private webinar with CryptoQuant on Thursday, the analyst stated that the Securities and Exchange Commission (SEC) has quietly recognized ETH as a commodity rather than a security, putting it in the same regulatory category as BTC.
“The SEC has approved Ethereum futures ETFs,” Seyffart noted, referring to the massive approval of funds from VanEck, ProShares, Bitwise and Valkyrie in August.
Sponsors were then inspired to file after the SEC approved the first leveraged Bitcoin futures ETF in June. This signaled to the market that regulators may now be willing to allow crypto products with a higher risk profile, such as Ethereum futures.
“So again, Gary Gensler won’t explicitly say whether Ethereum is a security or a commodity, but in their action, by approving those Ethereum futures ETFs, they are implicitly accepting those Ethereum futures as commodity futures,” Seyffart explained.
The distinction is important: commodities and securities face different regulatory, tax and reporting requirements, with the latter arguably entailing more burdens.
The Commodities and Futures Trading Commission (CFTC) – the SEC’s sister market regulator – has long considered BTC and ETH as commodities.
SEC Chairman Gary Gensler, on the other hand, has long been silent on ETH’s classification and has dodged interviewers when asked about the matter.
That said, the agency did not mention ETH in its lawsuits against Binance and Coinbase last year, which named dozens of other top cryptos including Solana (SOL), Cardano (ADA), and Polygon (MATIC) as securities.
Probability of ETF approval by SEC
The SEC has also provided few explicit details about whether it will approve Bitcoin spot ETF applications it has received from BlackRock, Fidelity, Grayscale and others. or disapprove. She noted only that she is “reevaluating” such proposals after losing the lawsuit with Grayscale in August.
Given the increasing engagement and discussions with applicants in recent months, analysts like Seyffart estimate the chance of ETF approval at 90% early next week. Ethereum ETFs aren’t so sure yet, but the SEC will have a hard time rejecting them. He added:
“It wouldn’t just be the SEC going against the crypto industry. Calling Ethereum a security goes against their sister regulator, the CFTC.”
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