If the SEC thinks Ethereum is a security, will the ETH ETF be doomed?

Will the SEC approve it? Ethereum What is this year’s ETF?

Market participants’ optimism is fading, and now the SEC’s position is: Ethereum Those hopes may have been dashed entirely when the securities went public.

“If this SEC approves a spot Ethereum ETF before the election, I’m going to eat my HODL hat,” said Matthew Sigel, head of digital asset research at Ethereum ETF applicant Van Eck. decryption.

The reason is that Lawsuit filed last week From an Ethereum software company ConsenSys Against the SEC, the Commission considers Ethereum (ETH) unregistered security—And the SEC has been investigating this for the past year. Consensys wants the court to declare Ethereum non-collateralized, preempting any future charges from the SEC. (Disclosure: Consensys is one of 22 investors. decryption.)

To be clear, the SEC has yet to file charges against Consensys or anyone else publicly claiming that Ethereum is a security. But the findings from the Ethereum giant’s lawsuit have already had far-reaching implications for top lawmakers in Washington. blame to SEC Chairman Gary Gensler lied to Congress last year about the agency’s position on ETH.

While the SEC’s investigation into Ethereum will have long-term implications, in more immediate terms it means that a spot Ethereum ETF will not happen, at least not without another legal fight.

The spot market Ethereum ETF allows Wall Street firms and investors to gain indirect exposure to ETH without having to deal with a cryptocurrency exchange or wallet. Discovery after 10 years of SEC rejection Bitcoin ETF finally gets approval. However, the deal only became possible after Grayscale, one of the cryptocurrency industry’s largest digital asset managers, successfully sued the SEC.

Nevertheless, since the Bitcoin ETF was approved, analysts have calculation The spot ETH ETF will likely follow soon after and be approved by the summer. Now Wall Street analysts and ETF issuers aren’t so sure.

Ethereum ETF applicants are expected to hear back from the SEC regarding approval. Until May 23rd. Until last month, analysts already cooling the prospect that these initial submissions will obtain approval; This week’s news further convinced experts that the ETH ETF application has a long way to go.

Eric Balchunas, senior ETF analyst at Bloomberg, said on Twitter this week that the SEC’s current unequivocal stance on ETH’s security status likely means a spot ETH ETF won’t be hitting Wall Street anytime soon. This is because ETFs based on commodities and securities operate under different rules, he said.

However, the SEC’s apparent hostility toward Ethereum does not appear to have scared off potential ETH ETF issuers. At least not yet. A spokesperson for cryptocurrency fund manager 21Shares said: first ever An Ethereum ETF applicant from the United States said: decryption The Company is making every effort to ensure that the petition is approved.

Van Eck, a more traditional Wall Street investment firm, also remains all-in.

Matthew Sigel, the company’s head of digital asset research, believes the product will be approved “in time.”

But he emphasized that Van Eck’s experience introducing cryptocurrencies to Wall Street has not been without conflict. This week’s news constituted just one more bump in the road that the company had always expected to be long and winding.

“This has been a war since January 2022 and a war for the entire Biden term,” he said. “Part of our investment thesis for this asset class is that we will continue to win bigger battles in the courts over time.”