Ethereum
Ethereum Soars as SEC Reconsiders Ether ETF Approval
Ethereum price jumped 18% as SEC reconsiders its stance on approving an Ethereum Spot ETF.
New developments on Monday suggest that the U.S. Securities and Exchange Commission (SEC) may rethink its stance on Ether (ETH) spot exchange-traded funds (ETFs). Bloomberg ETF analysts James Seyffart and Eric Balchunas indicated a change in the SEC’s approach, increasing the chance of approval from 25% to 75% after “hearing chatter” about the financial regulator’s internal discussions .
Analysts adjust their forecasts
On Monday, Seyffart and Balchunas posted on X to update their predictions regarding the SEC’s decision regarding spot Ether ETFs. “The SEC could do a 180 on its planned denial of Ether spot exchange-traded funds this week,” wrote Balchunas. This new outlook is based on various signals, including recent SEC filings, public statements from SEC Chairman Gary Gensler, and internal reports suggesting the commission may be leaning toward approval following political pressure exerted on Democrats to reverse their crypto policies.
Seyffart echoed this sentiment, mentioning that the issue had become “more and more political.” He hinted at a wave of related files in the coming days if their sources were correct. “I’ll never hear the end of this from the [Ether] people in my responses if this turns out to be true,” Seyffart remarked, highlighting the potential impact on the cryptocurrency community.
Upcoming deadlines and broader implications
The SEC’s decision on VanEck’s Spot Ether ETF is expected by May 23. The move is crucial because VanEck’s application is the first in a series of pending Ether spot ETFs, including those from ARK 21Shares, Hashdex, Invesco Galaxy, BlackRock and Fidelity. The SEC has already delayed VanEck’s application for as long as regulatory guidelines allowed, paving the way for a potentially groundbreaking decision.
Ethereum soared to $3,636 on the news
In an interview in April, VanEck CEO Jan van Eck expressed skepticism that the SEC would approve his company’s ETF application in May. This skepticism seemed justified when Grayscale withdrew its Ether futures ETF application on May 7, followed by the announcement of CEO Michael Sonnenshein’s resignation on May 20 (Cointelegraph).
Political and regulatory dynamics
The changing political landscape could also influence the SEC’s decision. Recently, US lawmakers in the House of Representatives and Senate voted to overturn an SEC rule affecting banks dealing with companies holding digital assets. The future of this congressional resolution remains uncertain, pending President Joe Biden’s decision to either veto it or sign it into law.
Additionally, the SEC has asked exchanges to update their 19b-4 filings, suggesting a potential move toward approving these requests. This request has led to speculation that the SEC may move toward an approval decision. However, even if 19b-4 filings are approved, ETFs will still need their S-1 applications to be approved before trading can begin, a process with no set timeline.
Industry reactions and future outlook
A company in talks with the SEC reported a more optimistic outlook, saying the regulator was no longer dragging its feet. This optimism is reinforced by the reassessment of Seyffart and Balchunas, who increased their chances of approval based on new information and internal sources.
The SEC’s investigation into whether Ether qualifies as a security continues to add to the complexity of the situation. This investigation, launched after Ethereum moved from a proof-of-work consensus mechanism to a proof-of-stake consensus mechanism, could influence the SEC’s final decision. A recent development from Prometheum, which launched its Ether custody service with the intention of offering services for other digital assets considered securities, could also play a role in shaping the SEC’s view .
As the May 23 deadline approaches, the financial and crypto communities are on high alert. The SEC’s decision could have a significant impact on the market, setting a precedent for future cryptocurrency ETF approvals, putting crypto center stage for the next election cycle, and shaping the asset regulatory landscape digital in the United States.