Author: Brayden Lindrea, CoinTelegraph; Translated by: Tao Zhu, Jinse Finance
If history is any indication, the fate of a spot Ethereum exchange-traded fund may be decided this week by a single vote from SEC Chairman Gary Gensler.
In January, the approval of a spot Bitcoin ETF was finalized by a panel of five commissioners. Two crypto-friendly commissioners, Hester Pierce and Mark Uyeda, voted in favor of the ETF, while commissioners Caroline Crenshaw and Jaime Lizárraga voted against it.
Gensler also voted to approve the bill, leading many to believe that his vote ultimately secured approval of the spot Bitcoin ETF, which was approved on January 10, 2024, in a 3-2 vote.
The SEC finally voted in favor of a spot Bitcoin ETF. Source: SEC
This week, the five SEC commissioners will vote on whether to approve or reject VanEck’s spot Ethereum ETF on May 23. Here’s what we know about them.
Hester Peirce
Peirce has earned the nickname “Crypto Mom” for a reason — she’s bullish on digital assets and wants to see more decentralization integrated into the broader financial system.
She has yet to confirm how she will vote on the spot Ethereum ETF.
However, she has become part of the Ethereum community and attended and spoke at the ETHDenver conference in Colorado in late February.
Hester Peirce (left) speaks at ETHDenver. Source: ETHDenver
Peirce has in the past slammed the SEC’s approach to regulating the cryptocurrency industry, calling some of the securities regulator’s methods “ineffective” and “pointless.”
Caroline Crenshaw
Crenshaw is a vocal critic of the cryptocurrency industry and a strong opponent of the spot Bitcoin ETF decision.
At the time, Crenshaw said that the price of a spot Bitcoin ETF would be subject to fraud and market manipulation in the broader industry, and that by approving a Bitcoin product, the SEC would be failing to protect American investors.
There is no evidence that Crenshaw has since changed his mind about spot crypto ETFs.
Caroline Crenshaw Source: SEC
“These markets have little systemic oversight and no other adequate mechanisms to detect and deter fraud and manipulation,” Crenshaw said in his dissent on a spot bitcoin ETF.
“[Spot trading] is fragmented and spread across different international trading venues, and many markets are not meaningfully regulated,” she added.
Mark Uyeda
Aside from Peirce, Uyeda is the only commissioner to criticize the SEC’s “coercive regulatory” approach to the cryptocurrency industry.
He disagreed with the SEC’s decision last December to reject Coinbase’s petition, which accused the agency of acting arbitrarily and capriciously in refusing to write rules to clarify regulation of the industry.
Uyeda also voted to approve a spot bitcoin ETF but expressed “strong concerns” about how the SEC made its decision.
Mark Uyeda (right) speaks at a Milken Institute conference. Source: Eleanor Terrett
He claimed that the commission strayed from the “significant market” test used to decide exchange-traded products and approved the spot Bitcoin ETF “some other way.”
Uyeda called the SEC’s reasoning “flawed,” but he cited “independent reasons” behind his decision to vote in favor of a spot bitcoin ETF.
However, it is unclear what these “independent reasons” are, let alone whether they would also apply to a spot Ethereum ETF.
Jaime Lizárraga
Lizárraga voted against approving a spot Bitcoin ETF and was the only commissioner who did not issue a statement following the decision.
However, he reportedly said in a November 2022 speech at Brooklyn Law School that Bitcoin's promise as a "viable alternative to traditional finance" and "true financial inclusion" has yet to be realized.
At the time, he opposed the idea that the SEC was taking a “coercive regulatory” approach to the cryptocurrency industry.
Jaime Lizárraga, Source: SEC
He also believes that most cryptocurrencies are subject to U.S. securities laws and therefore operate illegally.
There is no evidence that he has changed these views since the spot Bitcoin ETF was approved.
Gary Gensler
While Gensler voted to approve the spot Bitcoin ETF in January, some speculated that he was forced to do so because Grayscale won its appeal against the regulator a few months earlier.
It’s unclear whether he will approach the current wave of Ethereum ETF applications in the same way.
Gary Gensler talks to CNBC about cryptocurrency regulation. Source: CNBC
Earlier this month, Gensler confirmed in a May 7 interview with CNBC that the SEC’s decision was still under review:
“That is something that our committee is facing right now. We are a five-member committee and those papers will be taken up in due course.”
Gensler was also recently accused of avoiding answering whether Ethereum is a security — even when asked by Congress.
Deadline for filing Ethereum ETF applications with the SEC. Source: James Seyffart
Meanwhile, there are other potential issues in the works: an investigation into the potential security of ethereum, led by SEC Enforcement Director Gurbir Grewal.
Some fund managers also claim that the U.S. Securities and Exchange Commission (SEC) is less involved in spot Ethereum ETFs. According to reports, a lawyer for one of the applicants, Bitwise, said that some fund managers expect the SEC to reject it this week.
Recently, Nate Geraci, president of The ETF Store, noted that technically, the SEC could approve a 19b-4 application (a trading rule change) but prevent an immediate launch by delaying the S-1 filing (registration statement).
Source: Nate Geraci
Bloomberg ETF analysts Eric Balchunas and James Seyffart predict that there is a 25% chance that at least one spot Ethereum ETF will be approved on May 23, a figure that has dropped from 70% since January.
