After the recent approval of spot bitcoin ETFs by the US Securities and Exchange Commission (SEC), attention now turns to the anticipated ruling on ether funds. The approval of spot bitcoin ETFs marked a significant milestone, but the path for ether ETFs may not be as straightforward, according to industry insiders.
In September, Ark Invest and 21Shares jointly filed for a spot ether ETF, while VanEck refiled for one on the same day. Grayscale Investments moved to convert its Ethereum Trust into a spot ether fund, and BlackRock revealed plans for a spot ether ETF the following month.
Franklin Templeton’s Sandy Kaul expressed the expectation that more crypto-related filings would come from the company, emphasizing the trend of crypto assets moving into investment vehicles for easier investor access.
Ether’s Classification Quandary: Commodity or Security?
The Commodity Futures Trading Commission (CFTC) considers ether, like bitcoin, a commodity, overseeing the Chicago Mercantile Exchange (CME) that launched ether futures contracts in February 2021. Despite this, the SEC has not explicitly endorsed ether as a commodity, leading to uncertainties.
CK Zheng of ZX Squared Capital highlighted that since the approval of ether futures ETFs, spot ether ETFs logically should follow unless the SEC has concerns about market manipulations or deems ether a security.
BlackRock’s filing for a spot ether ETF acknowledged the ambiguity in legal tests for classifying digital assets as securities, leaving room for interpretation. The filing stated the possibility of dissolving the trust if ether is deemed a security under federal securities laws.
Differing Views on Spot Ether ETF Approval
Lara Crigger, editor-in-chief at VettaFi, expressed caution, citing the SEC’s clarification that approving spot bitcoin ETFs didn’t signal approval for other spot crypto funds. SEC Chairman Gary Gensler emphasized the majority of crypto assets falling under federal securities laws.
Bloomberg Intelligence analyst James Seyffart, however, is optimistic, pointing out that the SEC approved ether futures ETFs, signaling a potential positive outcome for spot ether ETFs. He believes going after ether would involve contending not only with industry players but also the CFTC.
Anticipating Approval Timing
Bitwise Chief Investment Officer Matt Hougan sees spot ether ETFs as within sight, though acknowledging the leap for SEC approval. The SEC has 240 days from the publication of spot ether proposals in the federal register to make a ruling. The first proposed fund, VanEck Ethereum ETF, set a May 23 deadline, with Ark Invest and 21Shares following closely.
Zheng speculated that the SEC might observe the market’s health post-approval of spot bitcoin ETFs before greenlighting spot ether ETFs. Despite uncertainties, he remains bullish on the arrival of spot ether ETFs, anticipating increased institutional investor interest in the future.