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A little more than a month after Securities and Exchange Commission Chairman Gary Gensler delivered the decisive vote that led to historic approval of 11 Spot Bitcoin exchange-traded funds, the crypto industry is now rolling out the Spot Ether ETF. Similar results are expected at an early stage. Like in May.
Sentiment surrounding the approval of the world’s second-largest digital asset spot product (a fund that tracks the daily or “spot” price of an asset) in 2024 is overwhelming, according to a series of interviews conducted by FOX Business. He is said to be favorable to This view is shared not only by the crypto industry, but also by some securities lawyers and traditional Wall Street insiders.
That said, skeptics are also speaking out. Some have pointed to Gensler’s past ambiguity about the legality of Ether, which could mean it is an unregistered digital coin and therefore not suitable for an ETF. Another concern: Ether does not have the same broad foundation or institutional support in the financial industry as Bitcoin, the first and most valuable digital asset.
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Those concerns aside, multiple securities lawyers told FOX Business that the legal precedent set during the approval process for the Spot Bitcoin ETF created a blueprint that will likely be followed in the case of the Ethereum ETF. .
Mark Powers, a blockchain professor at Florida International University, said: “If the same factors that led to the approval of the Spot Bitcoin ETF are at play here, it would be difficult for the SEC to find a new argument to deny the Spot Ether ETF. Deaf,” he said. Graduated from the School of Law and is a former SEC enforcement lawyer. “I don’t think Chairman Gensler has much of a choice.”
Gary Gensler, Chairman of the Securities and Exchange Commission (Andrew Haller/Bloomberg/Getty Images)
On January 10, the approval of nearly a dozen Spot Bitcoin ETFs, an unprecedented event given the number of issuers launching near-identical products and the nascent nature of the digital asset, was announced by crypto asset management firm Grayscale. This came about as a result of a court victory against the SEC. In August.
A panel of judges on the D.C. Court of Appeals has ruled that the SEC acted “arbitrarily and capriciously” when it outright denied Grayscale’s application to convert its 10-year Bitcoin trust into a spot ETF. Supported the scale side.
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The court took issue with the Commission’s argument that spot ETFs are significantly different from the futures ETFs approved by the SEC in 2021 and are inherently riskier for retail investors.
Grayscale’s victory was seen as a turning point for the cryptocurrency industry and a signal for other issuers to bring their own spot Bitcoin products to market. Just weeks after the ruling, the SEC began discussions with other issuers, including Grayscale and Wall Street giants BlackRock and Fidelity, about how to offer Bitcoin in a traditional ETF wrapper.
In a statement after the commission’s approval, Gensler acknowledged that Grayscale’s legal victory was critical to greenlighting the Spot Bitcoin ETF, saying, “The commission acted within the law and will how they interpret the law.”
SEC Commissioner Hester Peirce, who is largely pro-crypto and has voted in favor of approving the Spot Bitcoin ETF, said the commission does not need to ask courts to approve products people want to invest in. He has been speaking publicly since January.
U.S. Securities and Exchange Commission Commissioner Hester Peirce during the Permissionless II event on September 11, 2023 in Austin, Texas. (Thomas Allison/Bloomberg via Getty Images)
Another reason to think the SEC will take a favorable view of the EtherSpot ETF this year is the increased demand from big Wall Street firms.
More than six companies, including BlackRock and Fidelity, which collectively have $13.5 trillion in assets under management, have each applied to launch an EtherSpot ETF. On Monday, Franklin Templeton, which manages $1.4 trillion in assets, became the eighth company to file for a Spot Ether ETF with the SEC.
Grayscale also applied to convert its Ethereum trust products into spot ETFs.
“Ethereum is a different product than Bitcoin with unique aspects,” said Andrew Keyes, co-founder of DARMA Capital, which oversees the Ethereum investment fund. “Many Wall Street and fintech companies that are building applications on the Ethereum blockchain see long-term value in commercializing it,” he said.
Ethereum’s current price as of Thursday morning is $2,837 per coin, compared to Bitcoin’s value of $52,301. Together, the two account for more than half of the roughly $2 trillion that makes up the global cryptocurrency market.
Keyes and Powers also point to the existence of the Ethereum futures market as another reason why the SEC may find it difficult to deny Spot Ether ETFs.
“A fundamental part of the regulatory process is to ensure that the markets in which investors operate are not subject to manipulation,” Powers said. “The SEC stated that the CME Bitcoin futures market provides adequate oversight tools for spot market manipulation, which was a key factor in approving the Spot Bitcoin ETF.”
CME launched Bitcoin futures in 2017 and Ethereum futures in 2021.
Ethereum is facing withdrawal drawbacks and potential weaknesses have been exposed. (license/image)
“Given that Ethereum Spot ETFs already have monitoring tools in place and the SEC approved an Ethereum Futures ETF in October, in theory a blueprint for a Spot Ether ETF exists,” Keyes added. Ta.
Some think it is ambitious for the SEC to approve a Spot Ether ETF in 2024.
Some say Gensler’s refusal to say whether he considers ether a security is a red flag. The SEC chairman’s statements on this issue have changed since he served as chairman of the Commodity Futures Trading Commission from 2009 to 2014 and then as professor of blockchain technology at the Massachusetts Institute of Technology in 2018. But the chairman, who has been careful not to publicly express his thoughts on the matter since joining the company, will be reported to the SEC in April 2021.
With the Ethereum blockchain being upgraded to a so-called “proof of stake” mechanism in 2022, many in the industry wonder if the new structure will affect the status of Ethereum tokens in the eyes of the SEC Chairman. I have doubts that he will give it to me. Proof-of-stake protocols require traders to stake a portion of their cryptocurrency as collateral when adding new transactions to the blockchain. This is different from the “proof-of-work” mechanism that Bitcoin relies on, which requires users to “mine” tokens by solving complex mathematical puzzles.
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After Ethereum was upgraded to proof-of-stake, Gensler suggested that proof-of-stake tokens could constitute investment contracts subject to securities laws.
Investment banker TD Cowan believes the SEC will eventually approve the Spot Ether ETF, but not until after the November election. Cowan analysts believe that Mr. Gensler’s political aspirations, which include becoming U.S. Treasury secretary, are likely to be linked to progressives such as Massachusetts Sen. Elizabeth Warren, who has vehemently opposed the SEC’s approval of the Spot Bitcoin ETF. He believes this will be an incentive to bring Democratic members to his side.
The SEC declined to comment specifically, but directed FOX Business to its website for the latest information on the filing.
