The approval of Ethereum ETFs by the US Securities and Exchange Commission (SEC) has faced significant delays, as revealed by recent regulatory filings. This has affected proposals from VanEck, Ark Invest, Hashdex, and Grayscale, with discussions arising about the future of crypto ETFs in the country.
According to Bloomberg ETF analyst James Seyffart, who has been closely monitoring the situation, there is a lower probability of approval for Ethereum ETFs. He has expressed a shift in his cautious optimism, citing the SEC’s lack of engagement and contrasting approach to Ethereum compared to their attitude towards Bitcoin ETFs. This has dampened hopes for a positive decision by the important May 23 deadline. Similarly, Eric Balchunas has also noted the absence of bullish signals and sources that were present before the approval of Bitcoin ETFs, reducing the likelihood of a positive decision for Ethereum ETFs to only 35%.
The conversation has also extended to include the broader regulatory landscape for cryptocurrency. Some speculate that the SEC may require court approval before approving Ethereum ETFs, citing potential differences between Ethereum and Bitcoin in terms of their classification as financial instruments.
However, Seyffart disagrees with this idea, as it could fundamentally affect the regulatory treatment of Ethereum. The discussion also touched on potential outcomes and strategies, including the implications of Grayscale’s Ethereum futures product for potential legal challenges against the SEC’s decisions.
Meanwhile, both Fidelity and Grayscale have included a staking component in their newest versions of the Ethereum ETF applications. Staking, a fundamental aspect of Ethereum’s proof-of-stake model, involves locking up digital assets to support the network’s security and functionality, with participants receiving rewards in the form of additional crypto. Grayscale’s proposal, like Fidelity’s, allows the ETF to allocate part of its holdings to staking through selected providers, potentially including affiliates. This move aims to explore income generation options within a regulated framework, with the ETFs receiving Ether tokens as rewards, which could be considered revenue for the fund.
However, this new addition comes as US legislators have increased their scrutiny, asking the SEC not to approve any new crypto-related ETFs due to fears over investor risk. As the May 23 deadline approaches, the crypto community is on edge.
At press time, on March 20, 2024, Ethereum is ranked second by market capitalization, with a price increase of 6.6% in the last 24 hours. Its market capitalization is $384.94 billion, with a daily trading volume of $33.96 billion. The overall crypto market is estimated at $2.336 trillion, with a 24-hour volume of $184.43 billion, and a dominance of 52.29% by Bitcoin in the United States.
The article also mentions the latest Alpha Market Report and provides ways to learn more about Ethereum and the crypto market.
