ETH as a Commodity
An Ethereum (ETH) spot ETF is anticipated to make its way to the U.S. market soon, following the potential approval of several Bitcoin (BTC) based equivalents next week, according to Bloomberg ETF analyst James Seyffart.
During a private webinar with CryptoQuant on Thursday, Seyffart highlighted that the Securities and Exchange Commission (SEC) has tacitly recognized ETH as a commodity rather than a security, putting it within the same regulatory framework as BTC.
“The SEC has approved Ethereum futures ETFs,” noted Seyffart, referring to the mass approval of funds from VanEck, ProShares, Bitwise, and Valkyrie in August.
Sponsors were encouraged to apply at the time following the SEC’s approval of the first leveraged Bitcoin futures ETF in June. This served as an indication that regulators might now be willing to list crypto products with a higher risk profile, such as Ethereum futures.
“So again, Gary Gensler will not explicitly say whether Ethereum is a security or a commodity, but in their action, by approving those Ethereum futures ETFs, they’re implicitly accepting those Ethereum futures as commodities futures,” explained Seyffart.
The distinction between commodities and securities is crucial as they are subject to different regulatory, tax, and reporting requirements, with potentially greater burdens imposed on the latter.
The Commodities and Futures Trading Commission (CFTC), which is the SEC’s sibling market regulator, has long categorized both BTC and ETH as commodities. However, SEC chairman Gary Gensler has been evasive regarding ETH’s classification, evading questions about the matter.
However, the agency omitted mentioning ETH in its lawsuits against Binance and Coinbase last year, which named numerous other prominent cryptocurrencies including Solana (SOL), Cardano (ADA), and Polygon (MATIC) as securities.
Approval Prospects
The SEC has provided limited information regarding its stance on Bitcoin spot ETF applications from institutions like BlackRock, Fidelity, and Grayscale. It has only indicated that it is currently reassessing these proposals following its court case loss to Grayscale in August.
Due to increased engagement and discussions with applicants in recent months, analysts like Seyffart believe there is a 90% likelihood of ETF approval early next week. While Ethereum ETFs may not be as certain, it will be challenging for the SEC to deny their existence.
“Ethereum ETFs aren’t quite so guaranteed yet, but the SEC will have a hard time denying them,” Seyffart added.
