Why is the adoption of the Ethereum ETF inevitable?

Author: Daniel Kuhn, CoinDesk; Compiler: Deng Tong, Golden Finance

The United States’ approach should not be surprising. The U.S. Securities and Exchange Commission (SEC) is not jumping on the Ethereum (ETH) exchange-traded fund (ETF) bandwagon. Yesterday, the institution placed its bet on BlackRock’s Ethereum ETF proposal, which was initially filed in November, months after the asset manager unexpectedly decided to try launching a spot Bitcoin fund.

The SEC report states: “The Commission believes it is appropriate to specify a longer period for taking action on the proposed rule changes to allow sufficient time to consider the proposed rule changes and the issues raised therein. ” It used much the same language last week while also delaying the launch of the Fidelity Ethereum Fund.

This was a decision predicted by most market analysts. JPMorgan Chase (JPM) analysts said in a recent report that there is no more than a 50% chance that the SEC will approve an ETH-based ETF by May. James Seyffart, a veteran ETF expert at Bloomberg, said delays in Ethereum ETF spot proposals are likely to “continue to occur sporadically” in the coming months.

So what exactly does it take to list an ETH ETF? The situation appears to be even simpler than that of the Bitcoin ETF, which only recently came online after some dilly-dallying at the SEC. For years, theU.S. Securities and Exchange Commission was hesitant to approve Bitcoin funds over concerns about potential market manipulation.

BlackRock, the world's leading ETF issuer and largest asset manager, is the first to develop exchange monitoring protocols to calm these concerns, with 11 ETF issuers Several major concessions were also made to regulators, such as settlement in cash rather than Bitcoin, in order to gain approval.

But ultimately, Grayscale’s court victory forced SEC Chairman Gary Gensler to approve financial products based on Bitcoin. An appeals judge criticized the agency's earlier logic in approving futures-based ETFs but not spot-based ETFs as incorrect and asked it to re-evaluate listing standards.

So, it might be a good sign that the ETH futures ETF has been launched. However, Gensler said in a public statement that the decision to approve a Bitcoin ETF "in no way signals the Commission's willingness to approve listing standards for crypto-asset securities."

SEC Commissioner Hester Peirce, America’s Most Pro-Cryptocurrency The regulator recently said theSEC does not plan to go to court over the ETH ETF and said it will “apply precedent” when making a decision. Peirce has frequently broken with her committee colleagues and issued public statements criticizing the agency's many legal challenges against crypto companies and projects.

After Gensler announced the launch of a Bitcoin ETF, Peirce said in a scathing public statement that the agency had "squandered a decade of opportunity to do our job" and that it was a "failure to do so." A necessary but consequential saga” that preserved investor demand for the product and “driven retail investors” to trade Bitcoin in a less efficient manner. ”

While Peirce now says the SEC and Gensler have learned their lessons and therefore won’t change their “goals” like Bitcoin ETF applicants, she is hesitant to “predict what will happen to any specific” crypto product decision. In the Coinage interview, she noted that getting ETFs ready for the market requires “a lot of work” and that “facts and circumstances” do matter.

“Congress doesn’t give us the authority to tell people a specific whether the investment is right for them," Peirce said.

Bitcoin is easier to get approved because it is the only crypto-asset uniformly classified as a commodity by regulators. Gensler and Ethereum, which early regulators said " Fully decentralized”, he raised concerns about ETH, especially after the network moved to a staking mechanism.

JPMorgan analyst Nikolaos Panigirtzoglou wrote: “The SEC is targeting ETH for Lawsuits filed against cryptocurrency exchanges that offer staking services on proof-of-stake blockchains, including Ethereum, make the approval of an Ethereum spot ETF more challenging, at least until those lawsuits are resolved. ”

Panigirtzoglou also noted that the SEC did not directly mention ETH in its lawsuit against cryptocurrency exchanges Kraken, Coinbase or Binance for alleged violations of securities laws, suggesting that it may actually refer cryptocurrencies to Classified as a commodity. Additionally, if the SEC gets into a fight over the ETH ETF, it may have to contend with the Commodity Futures Trading Commission.

All of this Suggesting an ETH ETF is inevitable, but many hurdles still lie ahead.

While the SEC’s delaying action here prevents U.S. consumers from gaining access to the second-largest crypto in a safe, tax-advantaged way currency, but could ultimately be good for Ethereum. Peirce has repeatedly said that by challenging Bitcoin ETFs, the SEC is indirectly stimulating demand by creating an "artificial frenzy" around these products.

"Congress," she said We are not authorized to tell people whether a particular investment is suitable for them, yet we abuse administrative procedures to hide investments we don't like from the public. ”