Bittime - The world of crypto investment is currently abuzz with discussions regarding the approval ofthe United States Securities and Exchange Commission (SEC) for the Exchange Traded Fund (ETF) , namely the Ethereum ETF. There are different views from two publishers who both intend to launch this product, namely Ark Invest and 21Shares.
Ark Invest and 21Shares' Different Views on Ethereum ETFs
Ark Invest CEO Cathie Wood in a podcast with Jason Yanowitz, co-founder of Blockworks, expressed doubts about the approval of Ethereum ETFs in the near future, including the Ark 21Shares Ethereum ETF product. He estimates that the chances of approval in May will tend to decrease.
Industry observers predict the SEC's decision regarding the spot ether ETF application will come on or around May 23, 2024. That date marks the end of the 240-day period the regulator has to make a decision on the initial application submitted.
"One indicator of the approval of the spot bitcoin ETF is the intensive communication that has existed between us and the SEC," said Wood. "In my opinion, the SEC appears to be biding its time and may be reviewing various related issues."
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Spot Bitcoin ETF Approval
The SEC approved 10 spot bitcoin ETFs in January 2024, becoming the first product of its type in the United States market. Ark Invest partnered with European crypto ETP specialist, 21Shares, to launch one such BTC ETF. Currently, the ETF has about $3 billion in assets under management, ranking it fourth in the segment behind Grayscale Investments, BlackRock, and Fidelity.
Ophelia Snyder, co-founder of 21Shares , emphasized Grayscale's legal victory over the SEC last year as a major factor behind the approval of a Bitcoin ETF. That August court ruling stated that the SEC's action of allowing a Bitcoin futures ETF but denying the Grayscale Bitcoin Trust (GBTC) an ETF was "arbitrary and capricious."
On the other hand, the SEC allowed ETFs holding Ether futures contracts to start trading in October 2 years ago.
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Odds of Ethereum ETF Spot Approval
Given “how up-to-date much of the documentation is,” Snyder told Yanowitz that he was less pessimistic than Wood and others regarding the chances of an Ethereum spot ETF gaining approval soon.
"There's not much difference between filing for Ethereum and filing for Bitcoin," the 21Shares executive said. "They have the same structure, custodianship and disclosures. This shows high internal consistency. This means there is less work for the SEC to examine."
Staking as a Potential Obstacle?
Nonetheless, Wood argued that the point regarding asset staking in the spot ether ETF proposal was a "bump" for the SEC. Staking Ether is the process of depositing ETH to help secure the Ethereum blockchain and in return, users can earn a yield on that ETH.
The proposed amendment filed by Ark and 21Shares last month states that sponsors "may, from time to time, stake a portion of the trust's assets through one or more trusted staking providers." Fidelity and Grayscale made similar moves in their Ethereum ETF applications.
Bitwise applied for a spot ether ETF on Thursday, although their proposal did not include details regarding potential staking of the asset by the ETF.
Previously, COO of Gemini (a custodian for VanEck's spot bitcoin ETF and participating in discussions regarding the proposed ETH ETF), Marshall Beard told Blockworks he expressed confidence that a spot ether ETF that stakes assets "will not be the first version."
ETF.com senior analyst Sumit Roy believes that staking is a feature that makes Ether appear more like a security, "which the SEC certainly wouldn't like," he said.
BlackRock's View On Ethereum Asset Classification
BlackRock, the world's largest asset manager, is another issuer that has a spot ether ETF proposal under consideration by the SEC. The company's CEO, Larry Fink, in an interview with Fox Business News on Thursday, stated that Ether's designation as a security or commodity may not have a significant impact on the green light for the ETF.
When asked directly in the interview about the possibility of BlackRock launching a spot ether ETF even though ETH is categorized as a security, Fink responded: "I think, yes."
Conclusion
SEC approval of a spot ether ETF remains a question mark. Although there are differences in views between Ark Invest and 21Shares, there are several factors that indicate a considerable chance of approval.
First, the similarity in structure and documents between spot ether ETFs and spot bitcoin ETFs that have been approved by the SEC. This can speed up the SEC examination process. Second, the increasing number of large companies submitting spot ether ETF proposals, such as BlackRock, shows high investor interest in this product.
Third, although asset staking is a potential obstacle, several companies have proposed solutions to address SEC concerns. Despite several obstacles, the opportunity for Ethereum ETF spot approval is still wide open. The SEC's decision in May will determine the future of this product in the United States market.
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How to Buy Ethereum (ETH) on Bittime
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Learn the complete guide on how to buy Ethereum (ETH) on Bittime.
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DISCLAIMER: This article is informational in nature and is not an offer or solicitation to sell or buy any crypto assets. Trading crypto assets is a high-risk activity. Crypto asset prices are volatile, where prices can change significantly from time to time and Bittime is not responsible for changes in fluctuations in crypto asset exchange rates.
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