SEC raises questions over Ether’s security status

The recent disclosure from a March filing to the U.S. Securities and Exchange Commission (SEC) has caused the regulator to be worried about the possibility of Ether being called as a security. This development might be the basis for the approval of spot Ether exchange-traded funds (ETFs), which have been the hope of the crypto community for a long time.

SEC regulatory scrutiny intensifies

The crucial information is in the March 4 filing by BlackRock, asking for the registration of a spot Ether ETF on the Nasdaq. This paper asks the public for their opinion on whether the investment vehicle should be defined as a commodity-based trust or a security. As Davis Polk and Wardwell Associate Scott Johnsson claim, the clear purpose is to possibly refuse on the grounds that these spot filings are irregularly filed as commodity-based trust shares and do not qualify if they are holding security.

Eric Balchunas, the Bloomberg ETF analyst, though agreeing with the fact that the SEC filing was “buried”, is still doubtful, and he thinks that the chances of a spot Ether ETF approval are “slim” to none. This view is also strengthened by the approaching date of May 23 when the SEC has to give its verdict on VanEck’s spot Ether ETF application, which is the first in a line of applications waiting for the approval of the regulators.

Source: X

Spot Ether ETF approvals

If the SEC denies VanEck’s application, it could lead to the chain reaction of the rejections of the applications of other pending spot Ether ETF projects from the big firms like ARK 21Shares, Hashdex, Invesco Galaxy, BlackRock, and Fidelity. It is important to note that Grayscale withdrew its spot Ether ETF application on May 7 without giving any explanation, probably in view of the potential regulatory issues.

Jan van Eck, the CEO of VanEck, has said that he is not sure that the SEC will allow his company to issue an offering in May, which is a general view of the whole industry. The SEC’s decision will be watched closely by the market participants and stakeholders, who will not only pay attention to the regulatory changes but also their impact on the future of the spot Ether ETFs.

The SEC’s investigation of Ether’s security status has made the issue of spot Ether ETF approvals a questionable one. Although the regulator is still trying to deal with this complicated issue, the crypto industry is looking forward to clarification and guidance from the regulator, knowing that the possible effect of this on innovation and investment in this sector is very significant.