April 19, 2024
Concerns Arise Over SEC’s Ethereum Probe Potentially Affecting ETFs
Altcoins News

Concerns Arise Over SEC’s Ethereum Probe Potentially Affecting ETFs

The reported investigation into the Ethereum Foundation by the United States Securities and Exchange Commission (SEC) has stirred up concerns within the cryptocurrency community. Some industry experts suggest that this probe might be leveraged to hinder the approval process of spot Ether exchange-traded funds (ETFs).

Coordinated Attack on Ethereum?

According to sources familiar with the matter, the SEC has issued subpoenas to companies associated with the Ethereum Foundation. This move has led to speculation that the SEC could be aiming to classify Ether (ETH) as a security, potentially impeding the progress of ETFs based on the cryptocurrency.

Coinbase and Ikigai Asset Management Weigh In

Paul Grewal, chief legal officer at Coinbase, expressed skepticism regarding the SEC’s motives, stating, “The SEC has no good reason to deny the ETH ETP applications.” Grewal referenced previous statements by SEC Chair Gary Gensler, who testified that Ether is not a security, questioning the necessity of revisiting this regulatory stance.

Travis Kling, chief investment officer of Ikigai Asset Management, echoed concerns about a possible coordinated attack on Ethereum, hinting at uncertainty surrounding the situation.

Regulatory Hurdles for Spot Ether ETFs

Fox Business reporter Eleanor Terrett suggested that the SEC’s recent actions might elucidate the regulator’s reluctance to engage with potential issuers of spot Ether ETFs. This hesitation has led analysts like Eric Balchunas and James Seyffart to revise their predictions of an approved spot Ether ETF from 70% to a mere 25% by May.

Political and Industry Responses

Patrick McHenry, chair of the House Financial Services Committee, expressed disapproval of the reported SEC investigation, emphasizing its contradiction with previous regulatory decisions.

Brian Quintenz, a former commissioner of the Commodity Futures Trading Commission (CFTC), highlighted the SEC’s prior acknowledgment of Ether’s non-security status when approving Ether futures ETFs. He questioned the rationale behind revisiting this classification, especially given the legal implications for existing CFTC-listed Ether futures ETFs.

Speculation and Future Outlook

Charles Hoskinson, founder of Cardano, speculated that Ethereum’s transition to a proof-of-stake consensus mechanism might have prompted the SEC’s reevaluation of Ether’s security status. However, Quintenz argued that this transition would have been considered in previous regulatory decisions.

As the SEC continues to delay its decision on spot Ether ETF applications, industry analysts anticipate a denial in the short term but remain optimistic about eventual approval before 2025.

Conclusion

The SEC’s reported investigation into the Ethereum Foundation has raised concerns about its potential impact on the approval process of spot Ether ETFs. While regulatory uncertainty persists, industry stakeholders remain vigilant, monitoring developments closely as they await further clarity from the SEC.

Image by PixLoger from Pixabay

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