The critical moment for whether the U.S. Securities and Exchange Commission (SEC) approves the Ethereum spot ETF will be on the 23rd of this week. The SEC needs to make an initial and final decision on the applications of VanEck and Ark/21Shares (on the 23rd and 24th respectively). A final decision will be made on the 30th.
However, this time the market is not as optimistic as the previous Bitcoin ETF. Bloomberg reported on the 18th, citing people familiar with the matter, that some fund companies expected that their applications would be rejected because the applicants had private contacts with the SEC and were not like those who approved the Bitcoin ETF in January. Coin spot ETF has been so frequent before, Katherine Dowling, general counsel of Bitwise, which proposed the application for Ethereum spot ETF, pointed out that the market has generally expected to receive a rejection decision.
SEC delays technology?
In this regard, ETFStore President Nate Geraci tweeted an analysis this morning (20th) that the SEC must approve the 19b-4 (exchange rule change) application document and S-1 (registration statement) application document before the Ethereum spot ETF can be launched. From a technical perspective It is possible that the SEC will approve 19b-4 but slow down the execution of the S-1, especially given the SEC's lack of active participation.
The biggest problem at the moment is that the SEC has not clearly determined that Ethereum is a security or commodity. Scott Johnsson, general partner of Van Buren Capital, pointed out that the SEC is still considering this issue in its March 8 filing.
When conducting an opinion poll on BlackRock’s Ethereum spot ETF application, the SEC asked Nasdaq in a filing whether it “takes into account the nature of the underlying assets held by the trust” and asked if “its PoS mechanism and centralized control by a few individuals or entities", whether the arguments supporting the listing of a Bitcoin spot ETF apply to Ethereum.
K&L Gates partner Richard Kerr pointed out that the Ethereum spot ETF is a commodity-based product under the Securities Act of 1933. If Ethereum is considered a security, the issuer will not be allowed to trade in this name.
Will a lawsuit be filed if denied?
Neena Mishra, director of ETF research at Zacks Investment Research, believes that even if the SEC really refuses, the issuer is unlikely to file a lawsuit. They may be inclined to resubmit and have more communications with the SEC in the next 240 days. :
Legal proceedings are costly, and an Ethereum spot ETF is likely to attract far less investor interest than a spot Bitcoin ETF. Additionally, as the election approaches, issuers may prefer to wait for the results, hoping for a more crypto-friendly SEC chairman.
