Ethereum Spot ETF: Experts Say no Reason for SEC to Deny Approval

Ethereum Spot ETF: Experts Say no Reason for SEC to Deny Approval

Following the approval of 11 spot Bitcoin ETFs by the securities and exchange commission (SEC) in the U.S, there has been a push in different quarters for Ethereum spot ETFs.

However, there are indications that the SEC may deny the approval of an Ethereum ETF by the due date in May this year, but experts say there’s no reason for the agency to deny the approvals.

No Reason to Deny ETF

Several experts have commented on the upcoming decision by the SEC, saying that there’s no genuine reason why the agency should deny approval for Ethereum ETFs. One of them is Coinbase’s Chief Legal Officer, Paul Grewal.

He argued that the SEC has “no good reason” to deny the ETF applications. In a Twitter post, Grewal stated that “millions of Americans hold ETH; it has been vital to crypto since its 2015 launch; and ETH is a commodity, not a security,” adding that the SEC itself has affirmed this status of ETH.

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“The SEC has no good reason to deny the ETH ETP applications. And we hope they won’t try to invent one by questioning the long established regulatory status of ETH, which the SEC has repeatedly endorsed. That’s not how the law works. And Americans deserve better,” Grewal said.

He also added that the Howey Test which the SEC uses to determine which assets are securities and which ones are not, does not qualify ETH as a security.

“Digital assets like ether that do not involve an ongoing contractual obligation related to a business enterprise are not ‘investment contracts’ or otherwise ‘securities.’” Even if the test was applied, ether fails it anyway,” he argued.

Similarly, Former CFTC commissioner and Global Head of Policy at a16z, Brian Quintenz said the SEC already gave ETH a pass mark when it allowed its futures ETFs to be traded. 

“When the SEC allowed ETH futures ETFs to trade on its regulated security exchanges, it explicitly acknowledged the status of the underlying, ETH, as being a non-security and outside of its jurisdiction,” Quintenz wrote on Twitter yesterday.

Analysts Becoming Pessimistic

At the beginning of the year, analysts from JP Morgan and Bloomberge were more optimistic about the approval of an Ethereum spot ETF. That optimism seems to be dwindling right now as Bloomberg ETF analysts Eric Balchunas and James Seffart have reduced their expectations for an approval to 25%. 

Their conclusion is based on the body language of the SEC compared to their response leading up to the approval of spot Bitcoin ETFs. The SEC is expected to make its final decision on a spot Ethereum ETF application from Ark and 21Shares by May 23. 

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Archie Lovell
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Archie Lovell

Archie Lovell, a premier voice in crypto journalism, skillfully demystifies the intricate world of digital currencies. With a keen analytical eye and compelling narratives, Archie's writings delve deep, offering clarity amidst the complexities of blockchain. His expertise and style make him a trusted guide in the crypto space.

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