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In early March, the U.S. Securities and Exchange Commission postponed a decision on BlackRock and Fidelity’s Ethereum spot ETF, a move that pushed the date for the SEC’s final decision to May 23. This can’t help but recall the twists and turns of the original Bitcoin spot ETF approval process. At the same time, Ethereum’s rise does not seem to be as strong as Bitcoin’s, which seems to reflect the buyer’s hesitation about this “major good news” to a certain extent.

It is not difficult to find from the price trend of Bitcoin in the past year that the spot ETF has a huge driving effect. Since a number of asset management companies applied for Bitcoin spot ETFs last year, the market has reacted in advance to its approval, which has caused the price of Bitcoin to continue to rise from 25,000 USDT until it recently exceeded 70,000 USDT after its implementation.

It can be seen from this that the spot ETF of crypto assets has a relatively high effect on raising the price of the asset.

Additionally, BlackRock’s Bitcoin holdings have surpassed MicroStrategy’s just two months after the spot ETF was approved. The increase in positions by traditional asset management companies has increased the demand for tokens, and price increases have become a high probability event.

So the approval time for Ethereum spot ETF is approaching, will the previous scene of Bitcoin spot ETF happen again? What are the current obstacles to approval of an Ethereum spot ETF? Odaily Odaily collates the opinions in the market and determines the possibility of the recent approval of the Ethereum spot ETF.

Market sentiment is not optimistic, and whether Ethereum is recognized as a security is the deciding factor

As the Ethereum spot ETF decision approaches, the market is gradually increasing its discussion, but few are as one-sided as positive as before the Bitcoin spot ETF was approved. On the contrary, most are not optimistic about it.

Recently, FOX Business reporter Eleanor Terrett stated on social media that optimism about the SEC’s approval of an ETH spot ETF before May 23 is weakening. And revealed the phenomenon observed by relevant insiders, “Meetings in recent weeks have been largely one-sided, with issuers and custodians trying to encourage SEC staff to promote the process, but staff have not (as they are dealing with BTC spot ETF application) to really get involved in a meaningful way.”
Terrett also heard that SEC Chairman Gary Gensler believes he has calmed the industry by approving a BTC spot ETF. And influential anti-cryptocurrency politicians (such as Senator Elizabeth Warren, etc.) are already angry about the US SEC’s approval of a BTC ETF and are rallying against a similar situation happening with Ethereum.

Judging from Terrett’s statement, the SEC’s official attitude towards the Ethereum spot ETF is relatively cold, and anti-cryptocurrency politicians’ opposition to the Ethereum spot ETF is even more intense.

Eric Balchunas, a Bloomberg ETF analyst who previously provided opinions on Bitcoin spot ETF, also expressed that he is not optimistic about the approval of Ethereum spot ETF. He believes that the SEC has not yet given any comments to the applicant issuer. This is different from previous Bitcoin Thats not the case with spot ETFs. In addition, compared with previous judgments in U.S. courts on spot Bitcoin ETF lawsuits, the U.S. SEC does not have issues related to the Ethereum ETFs defeat, and the correlation between Ethereum spot and futures is not as strong as the Bitcoin ETF. The final situation Probably not optimistic.

Judging from Eric’s statement, the SEC is not active in applying for an Ethereum spot ETF, and the SEC has no restrictions on Ethereum.

Jake Chervinsky, chief legal officer of Variant Fund, said on the Large, if the spot Ethereum ETF fails to be approved in May, the market can focus on the August deadline.

However, Galaxy Digital founder and CEO Michael Novogratz expressed optimism about the approval of the Ethereum spot ETF. Novogratz expects the spot Ethereum ETF to receive SEC approval this year, and Galaxy is working with Invesco to seek to provide Ethereum ETF services.

In early March, Coinbase met with U.S. SEC officials to discuss Grayscale’s proposal to convert the Ethereum Trust Fund into a spot ETF. Coinbase believes the potential Ethereum ETF shares should be classified as commodity-based shares, the same as the Bitcoin ETF. Coinbase also stated that the ETH spot market highly demonstrates the markets tolerance for fraud and manipulation, and Coinbase has reached a supervision sharing agreement with CME to assist in the investigation of fraud and manipulation. But the SEC has yet to respond.

Valkyrie Chief Investment Officer Steven McClurg believes in an interview with the media that a spot Ethereum exchange-traded fund may not appear anytime soon, but may be approved within the next year or two. And McClurg believes that regulators and the SEC have just passed the Bitcoin spot ETF and it will take some time to understand the crypto industry.

In fact, it can be seen from the above remarks that the first issue facing whether the current Ethereum spot ETF can be approved is how the SEC views it. Whether Ethereum is recognized as a security will be a key factor.

What do the SEC consider “securities”?

Before 2022, the SEC had said that the classification of digital assets depended on their specific characteristics and uses. SEC officials generally emphasize that the determination of whether a digital asset is a security needs to be evaluated based on how it operates in transactions and the extent to which investors can expect to make profits on it.

According to the SECs previous statement, Ethereums ICO in 2014 may be judged as a securities. Secondly, Ethereum was previously a POW, and the tokens had no actual role in maintaining the operation of the Ethereum network. In other words, That said, the token itself cannot earn income. However, when Ethereum switches from POW to POS, holders can participate in network maintenance and earn staking income by pledging, which is consistent with the previous SECs statement of securities.

However, according to previous statements by SEC Chairman Gary Gensler, in 2018, Gary believed that Ethereum was not a security. However, after Ethereum was converted to POS, Gary has not yet responded to the question of whether Ethereum is a security.

However, according to Bloomberg ETF analyst James Seyffart, the SEC “implicitly” accepted Ethereum as a commodity when it approved an Ethereum futures ETF last year. At the same time, Seyffart also stated that if Ethereum is considered a security again, it will be contrary to the views of the regulatory agency CFTC.

Gary himself has recently made no comment on whether the Ethereum spot ETF has been approved, and he also refused to disclose the key attributes of Ethereum.

In addition, whether the Ethereum spot ETF can be approved will also be subject to the risks of independent individuals. For example, Vitalik is the soul of Ethereum. His words and deeds will affect the future trend of Ethereum to a certain extent. Assuming that the Ethereum spot ETF is approved Approved, Vitalik has investment risks that affect the instability of the Ethereum spot ETF, which will be a factor that does not need to be considered in the Bitcoin spot ETF. In addition, pledge is also a point where the SEC often comes to trouble.

To sum up, it can be seen that the difficulty of obtaining approval for Ethereum spot ETF is higher than that of Bitcoin spot ETF. Comparing the token rise before and after the approval of Bitcoin spot ETF, Ethereum has not gone out of the independent market due to the expectations of ETF speculation. Judging from the current attitude of the SEC, approval is unlikely in the short term, and a final decision may not be made until the SEC further conducts risk pricing on the encryption industry.