Ethereum is the best performer among the top 10 most valuable coins. As of press time, ETH has posted an impressive 30% gain and is steadily rising above $3,700 as bulls break through immediate resistance levels.
The trigger is that the U.S. Securities and Exchange Commission (SEC) is likely to approve the first Ethereum exchange-traded fund (ETF) this week or in the coming days.
The reasons why the US SEC would approve a spot Ethereum ETF would be enormous.
But while expectations are high and traders are hoping for further gains above $4,100 and all-time highs, the potential approval of this derivative has sparked a legal debate surrounding ETH’s classification.
Jake Chervinsky, an attorney who frequently comments on cryptocurrency issues, took it with It was argued to
Chervinsky points out that this decision will be a major policy action for the strict regulator. Over the years, the US SEC has been hesitant to classify any asset other than Bitcoin as a commodity.
The move to approve Ethereum would indirectly move the committee’s hand to approve ETH as a Bitcoin-like product.
It would just make sense. Specifically, like the spot Bitcoin ETFs issued by ProShares and Fidelity, this product tracks the price of all unstaked ETH.
Following calls from regulators to direct interested issuers of spot ETH ETFs to amend their applications, analysts have noted an interesting change.
Combining recent U.S. 19b-4 filings from applicants like Grayscale, the issuer continues to classify its shares under the “commodity-based trust shares” rules.
Additionally, Fidelity’s application explicitly states that ETH will not be staked. Some see this deliberate divestment as a strategic move to satisfy regulators’ potential concerns about securities classification.
ETH staking is problematic for regulators
This is what the US SEC claims. resisted Because of staking, ETH is classified as a security. Since it is a proof-of-stake network, it is likely to promise returns. be interpreted A network that offers guaranteed profits or income.
This function, in turn, can sort ETH into securities according to Howey test criteria. In this case, ETH becomes a security and must be registered with the regulator.
Nonetheless, some say the Howey test is no longer useful given that Ethereum and digital assets in general are emerging asset classes.
Representative Tom Emmer explained X on May 21 to provide clarity. Proverb There are ongoing efforts to provide legal clarity through the Securities Clarity Act. The purpose of the bill is to establish that tokens themselves do not automatically constitute securities.
Featured image from Canva, chart from TradingView