Ethereum ETF Approval in May Unlikely, Says Galaxy Digital Research Head
Approval for spot Ethereum (ETH) exchange-traded funds (ETFs) in May now seems โextremely unlikely,โ according to Alex Thorn, head of firmwide research at Galaxy Digital. Recent reports of subpoenas issued by the Securities and Exchange Commission (SEC) to crypto firms regarding their relationship with the Ethereum Foundation have cast doubt on the May approval. Thorn suggests that if the SEC is seeking information about crypto firmsโ interactions with the Ethereum Foundation, it may be considering whether the original Ethereum initial coin offering (ICO) in 2014 was an unregistered securities offering. However, any enforcement action against the Ethereum Foundation almost a decade later would be โextremely irregular.โ
SECโs Investigation into ETH
SEC Chairman Gary Gensler has refused to comment on whether the agency considers ETH a security. The SEC views Ethereumโs 2022 โMergeโ upgrade as enhancing the likelihood that ETH is a security due to the networkโs transition from proof-of-work to proof-of-stake. However, Thorn argues that if the SEC moves to allege securities violations against ETH or the Ethereum Foundation, it would be โtreading on tricky ground in terms of law, regulatory precedent, and impact on over a decade-old industry.โ
If the SEC takes action against ETH or the Ethereum Foundation for the ICO, it would represent a significant escalation in enforcement efforts by a Commission currently facing challenges in court and on Capitol Hill.
Doubts About Spot Ethereum ETF Approval
Thornโs perspective aligns with market experts who doubt the approval of a spot Ethereum ETF by May. Bitwise CIO Matt Hougan recently stated that delaying approval might be beneficial, allowing Wall Street to digest spot bitcoin ETFs before focusing on a new one. He anticipated that a later approval might result in even more assets.
Given the current circumstances and the SECโs investigations into Ethereum, it appears that the approval of spot Ethereum ETFs in May is highly unlikely. The SECโs scrutiny of the Ethereum Foundation and its potential classification of ETH as a security have cast significant doubt on the upcoming deadline. Hereโs what you need to know:
SEC Subpoenas Crypto Firms
The SEC has reportedly issued subpoenas to various crypto firms regarding their relationship with the Ethereum Foundation. These subpoenas are part of an investigation into whether the original Ethereum ICO in 2014 was an unregistered securities offering. The SECโs focus on this issue suggests that it is considering the classification of ETH as a security, which could have significant implications for the crypto industry.
Ethereum Foundation Receives Confidential Inquiry
In addition to the subpoenas issued by the SEC, the Ethereum Foundation has received a voluntary and confidential inquiry from an unspecified state authority. This inquiry led to the removal of the โwarrant canaryโ from the Ethereum Foundationโs website, raising further concerns about potential regulatory actions against ETH and its associated entities.
SEC Chairman Refuses to Comment on ETH Classification
Despite these developments, SEC Chairman Gary Gensler has remained silent on whether the agency considers ETH a security. However, experts believe that the SECโs view of Ethereumโs transition to proof-of-stake through the Merge upgrade increases the likelihood of classifying ETH as a security. This could have far-reaching consequences for the cryptocurrency industry.
Potential Ramifications of SEC Action Against ETH
If the SEC decides to take action against ETH or the Ethereum Foundation for its ICO, it would represent a significant escalation in enforcement efforts by the Commission. This comes at a time when the SEC is already facing challenges in court and on Capitol Hill, making any enforcement action against Ethereum highly contentious and potentially disruptive to the industry.
Doubts About May Approval
Given the SECโs investigations into Ethereum and the uncertainties surrounding its classification as a security, experts like Alex Thorn believe that the approval of spot Ethereum ETFs in May is highly unlikely. These doubts align with the views of market experts who argue that delaying approval might be beneficial in allowing for a more measured approach to ETFs and their potential impact on the market.
Overall, the current regulatory landscape surrounding Ethereum and its potential classification as a security raises significant doubts about the approval of spot Ethereum ETFs in May. Investors and industry participants should closely monitor developments in this space as they unfold.
๐ฅ Hot Take: Spot Ethereum ETF Approval Unlikely Due to SEC Investigations
The recent subpoenas issued by the SEC to crypto firms regarding their relationship with the Ethereum Foundation have cast doubt on the approval of spot Ethereum ETFs in May. The SECโs investigation into whether the original Ethereum ICO was an unregistered securities offering suggests that it may classify ETH as a security, which could have far-reaching consequences for the industry. Additionally, the Ethereum Foundationโs receipt of a confidential inquiry from a state authority further adds to concerns about potential regulatory actions against ETH. Given these developments, experts believe that the approval of spot Ethereum ETFs in May is highly unlikely. Investors should closely monitor these regulatory developments as they unfold to assess their impact on the crypto market. ๐๐
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