Regulatory Hurdles and Approval Chances
After the anticipation surrounding Bitcoin spot ETFs, the focus has shifted towards the potential approval of Ethereum ETFs by the SEC. With decisions on applications from Grayscale and BlackRock delayed, the industry is closely watching Fidelity’s upcoming proposal facing a critical March deadline.
According to Brian Evans, CEO of BDE Ventures, the approval process for Ether ETFs is expected to mirror the complexities faced by Bitcoin ETFs. He stated, “There will be prolonged discussions on issues like cash or in-kind redemptions and surveillance-sharing agreements.”
Ethereum’s regulatory status remains uncertain, with Rostin Behnam of the CFTC suggesting it should be regulated as a commodity. Clear definitions from regulators are pivotal for the potential approval of an ETH ETF.
End users of the ETF need clarity on who controls Ethereum if it really is a commodity. Ideally, it should be ‘nobody’ like BTC.
Alejo Pinto, co-founder of Pontes, emphasized the importance of understanding Ethereum’s governance in determining its regulatory classification.
Security Classification and Market Impact
The classification of Ethereum as a security could pose significant challenges for its ecosystem and the approval of an ETF. Anton Umnov, CEO of Helika, highlighted the increased SEC oversight and potential market maturity focus in such a scenario.
“It threatens the survival of the Ethereum project itself and could therefore put the Ethereum ecosystem under great uncertainty,” said Alessandro Frizzoni, CEO of Cryptosmart.
On the other hand, a non-security classification for Ether could lead to a less stringent regulatory path but would still require addressing investor protection and market integrity concerns.
Deutsche Bank predicts the approval of the first ETH ETF by May 23, while TD Cowen expects a longer approval timeline until 2025 or 2026.
Various industry experts hold mixed opinions on the approval timeframe, with factors like political variables and regulatory caution playing significant roles.
