Ethereum ETF to launch in May? Why do most people in the industry hold a negative attitude?

Author: Ben Strack, Blockworks; Compiler: Deng Tong, Golden Finance

Although people agree that the United States A spot Ethereum ETF is imminent, but most industry executives agree that regulatory reviews will delay approval in the short term.

The U.S. Securities and Exchange Commission is expected to rule on such product proposals by May 23, after delaying decisions on several applications.

“I’m 100% sure it will be approved; I’m not 100% sure when,” noted CoinFund President Christopher Perkins. “It’s ridiculous that we don’t have more regulatory certainty beyond that.”

When the SEC approved a spot Bitcoin ETF product in January, Chairman Gary Gensler said in a statement A statement said the action was “limited to ETPs holding Bitcoin, a non-security commodity.”

Gensler added that the approval was the "most sustainable path forward," in part because of the SEC's court loss to Grayscale Investments last August.

Grayscale CEO Michael Sonnenshein said on Tuesday that the key to the lawsuit is that there is an "inextricable link" between the regulated Bitcoin futures market and the spot market.

The view is that the SEC approved a Bitcoin futures ETF and therefore it is unfair to reject spot BTC products. Grayscale’s legal victory has seen 10 spot Bitcoin ETFs trade on U.S. markets in the past 10 weeks.

U.S. securities regulators allow Ethereum futures ETF to start trading in October — a fact that many industry observers point to when arguing for the inevitability of a spot Ethereum ETF.

These funds, like the Bitcoin Futures ETF, hold futures traded on the Chicago Mercantile Exchange (CME) contracts, the exchange is regulated by the Commodity Futures Trading Commission.

Sonnenshein said: “What we are seeing now is a very similar set of data, if not stronger, evidence of the Ethereum regulated market... versus Ethereum spot. The correlation between markets." "The question is just whether the data in front of them is really convincing enough by the time the SEC gives its first deadline in May this year."

Anthony, founder of SkyBridge Capital Anthony Scaramucci doesn't think so.

When asked whether an Ethereum ETF would be approved, he told a DAS panel on Wednesday: “Maybe by the end of the year, but very unlikely in May.” It has to happen, but [Gensler] will take steps to delay it."

Bloomberg Intelligence analyst James Seyffart said, The SEC's lack of engagement with issuers to date seemed to indicate denial in May.

Bitwise Chief Investment Officer Matt Hougan said during a panel discussion at Sonnenshein that the SEC will wait a little longer to approve an Ethereum ETF.

He believes that if such funds were launched at the end of the year instead of in May, they would gather more assets.

“Wall Street and traditional finance are just starting to absorb this huge thing that is Bitcoin,” Hougan said. "They're just starting to get into it and I think you need to give them a little longer to digest it."

New chaos in Ethereum ETF decision-making?

Fortune reports that the U.S. Securities and Exchange Commission has subpoenaed several U.S. companies for dealing with the Ethereum Foundation, the organization responsible for overseeing the Ethereum blockchain.

Ethereum network developer Pablo Pettinari said that although Blockworks has not confirmed the report, the Ethereum Foundation "received voluntary inquiries from national authorities, which included confidentiality requirements."

It is "extremely common for the Crypto Protocol Foundation to receive voluntary requests for information from federal and state regulators," Willkie Farr & Gallagher partner Mike Selig said in an X post.

Nonetheless, the possible investigation re-raises a question from years ago: Is Ethereum a security or a commodity? ? Industry observers noted that this issue will affect the SEC’s ruling on the Ethereum ETF.

While the CFTC labels Ethereum a commodity, when asked When it comes to the status of ETH, Gensler has never given a clear answer.

William Hinman, then director of the SEC’s corporate finance department, in 2018 "The current offer and sale of Ethereum are not securities transactions," the speech stated. In a series of posts on X, Coinbase chief legal officer Paul Grewal said the SEC " "There is no good reason" to reject spot Ethereum ETF applications.

“We hope they don’t try to invent a cryptocurrency by questioning ETH’s long-established regulatory status, which the SEC has repeatedly endorsed. That’s not how the law works. Americans should Get better treatment."

a16z crypto global policy director and former CFTC member Brian Quitenz also said on X, SEC " It is expressly acknowledged that "ETH is not a security and does not fall within its jurisdiction."

He added: “Given that the SEC has notified the market that ETH is not within its jurisdiction, if the SEC delays or rejects the Ethereum ETF, it will be interesting to see what excuses it will use ( It will be interesting if there is one."

Ethereum ETF still needs to wait

A potential Ethereum spot ETF has added language to its application about pledging its holdings.

Staking Ethereum is depositing ETH to help protect the Ethereum block chain process and earn ETH income from it.

For example, proposals revised by Ark Invest and 21Shares last month stated that sponsors “may from time to time pledge a portion of a trust through one or more trusted staking providers assets".

Fidelity and Grayscale added similar language to their proposals earlier this week.

Gemini Chief Operating Officer Marshall Beard said he believes it could take another six to nine months for the SEC to Spot Ethereum ETF approved.

An Ethereum ETF holding the asset “won’t be the first version,” he added.

Gemini is already the custodian of the VanEck spot Bitcoin ETF and is in related discussions regarding the proposed ETH fund.

Beard pointed out: "There are a lot of complex issues that need to be solved on the regulatory side as well as the operational and technical sides."

ETF.com senior analyst Sumit Roy agreed that it is difficult to imagine the SEC A potential Ethereum ETF would be allowed to stake its holdings.

He added: “Staking is a feature that makes Ethereum and other proof-of-stake cryptocurrencies more like securities. And the SEC won't be optimistic about this."