The Ethereum-Securities and Exchange Commission (SEC) Conflict Intensifies: ETH Exchange-Traded Funds (ETFs) Drift Farther Away from Approval
The Securities and Exchange Commission (SEC) is once again in the spotlight as it delays the approval of Ethereum exchange-traded funds (ETFs), unlike its recent approval of Bitcoin ETFs. SEC Chair Paul Grewal believes that Ethereum should be classified as a commodity rather than a security, arguing that it meets the criteria for commodity classification and has similarities to Bitcoin. However, the SEC is taking a cautious approach, causing uncertainty among investors about approval timelines and confidence in the Ethereum market.
Grewal’s commentary highlights Ethereum’s journey since 2015 and its recognition as a commodity by senior SEC officials. He emphasizes that even SEC trial lawyers have compared Ethereum to Bitcoin, further supporting its standing as a commodity. Grewal also mentions that the Commodity Futures Trading Commission (CFTC) has classified Ethereum as a commodity and that Ethereum futures contracts have been trading on CFTC-regulated exchanges since 2021. He concludes by stating that Ethereum does not meet the criteria of the Howey test, which determines if an asset is a security. He urges the SEC to adhere to its stance on Ethereum and avoid creating excuses to reject Ethereum ETF applications, emphasizing the need for fair and transparent rules for investors and the crypto market.
The SEC has postponed its decision on several Ethereum ETF applications, including those from Ark Invest, Hashdex, Grayscale Investments, and BlackRock Inc. The final decision on VanEck’s proposal is expected on May 23. The main point of contention for the SEC is whether Ethereum should be classified as a security or a commodity. While Ethereum exhibits characteristics of both, the SEC is hesitant to make a definitive classification and may prefer legal clarity before making a decision. The SEC is also open to public comments on concerns related to market manipulation and fraud, echoing the issues that delayed the approval of spot Bitcoin ETFs.
Despite recent volatility, Ethereum’s price has shown bullish sentiment, with a 40% surge year-to-date. However, there has been a downturn in the past week, with prices dropping below $3,300 and an overall decline of 12% in the last five days.