The SEC Requests Public Input on Approving Spot Ethereum ETF
The United States Securities and Exchange Commission (SEC) has announced that it is inviting the public to provide feedback on the potential approval of a spot Ethereum (ETH) exchange-traded fund (ETF). In an official court filing on April 2, the SEC specifically mentioned the Bitwise Ethereum Trust, Fidelity Ethereum Fund, and Grayscale Ethereum as subjects for comment.
The SEC Seeks Comments on Spot Ethereum Approval
According to recent court documents, the SEC is seeking comments on a proposed rule change from interested individuals. The court filing explains that the rule change aims to improve the functioning of a fair and open market, protect investors and the public interest, and facilitate the listing and trading of an additional type of exchange-traded product. This change is expected to enhance competition among market participants, benefiting investors and the marketplace at large.
What Are the Chances of Spot ETH ETF Approval?
The SEC’s call for public comment follows its approval of several spot Bitcoin ETFs in January 2024. This move is seen by many in the crypto community as a catalyst for wider acceptance of cryptocurrencies in mainstream finance. Since the approval, spot Bitcoin ETFs have surpassed the market capitalization of traditional silver ETFs, attracting approximately $862 million in inflows just last week.
SEC Chair Gary Gensler has, however, cautioned the public not to interpret the approval of spot Bitcoin ETFs as an indication of the Commission’s willingness to approve listing standards for crypto asset securities. He also clarified that the approval does not reflect the SEC’s position on the legal status of other crypto assets or the compliance of certain participants in the crypto asset market with federal securities laws.
Currently, experts believe that the chances of spot Ethereum ETF approval by May have significantly decreased in recent months. Bloomberg ETF analyst Eric Balchunas estimates the odds at a pessimistic 25%.
A Regulatory Divide at the SEC?
Under Gensler’s leadership, the SEC has maintained a generally negative stance towards cryptocurrencies. The agency has often relied on enforcement actions rather than establishing a clear regulatory framework. During the SEC Speaks event hosted by the Practicing Law Institute, Gurbir S. Grewal, the Director of the SEC’s Enforcement Division, criticized the crypto sector for its lack of compliance with regulations.
However, SEC Commissioner Hester Pierce has expressed dissent within the agency regarding its enforcement approach. She has gone as far as suggesting that the SEC’s actions are scaring people away. The ideological divide within the SEC may have implications for the potential approval of spot ETH ETFs.
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