Is An ETH ETF On The Cards?

With bitcoin spot ETFs approved, could ETH be next in line?

Will the SEC allow an Ethereum ETF?

The approval and success of the Bitcoin spot ETFs has raised the possibility that new crypto ETFs will be launched in the coming months, offering a gateway for institutional and retail money into further digital assets.

A number of Bitcoin ETF providers have already applied to the SEC for permission to launch ETH ETFs. Although Bitcoin ETFs have paved the way, getting an ETH ETF over the line is not a done deal. Nonetheless, there is some degree of optimism that the SEC will green light one or more in the coming year, and possibly as soon as May.

ETH Vs BTC

One of the problems that ETH faces is its uncertain regulatory status. The SEC has conceded that Bitcoin is a commodity. With no company behind it, no centralized promotion, and a highly decentralized network, it does not meet the criteria for a security under US law. Ethereum, on the other hand, is in a less clear position. SEC Chair Gary Gensler's refusal to state whether ETH is a commodity or a security (despite him claiming the rules are clear), indicate a desire to keep the SEC's options open. If ETH is considered a security, this complicates matters for an ETF.

Key Points From Gary Gensler’s Testimony
The Congressional hearings took on a familiar pattern of accusation and evasion, but seem to be slowly building to a denouement.

On the other hand, there are already ETH futures ETFs. Since a major strand of the legal case for Bitcoin spot ETFs was that futures ETFs already existed, and reflected the spot market closely, it becomes hard to deny an ETH spot ETF.

As a result of industry pressure (including from Fidelity and BlackRock) for an ETH ETF, crypto broker Bernstein believes there is a 50% chance of approval by May, and near certainty in the next 12 months. However, they also state that ETH is likely the only digital asset other than BTC to get an ETF in the foreseeable future. It's far easier to make the case that other digital assets are securities, due to the relatively centralized development processes and marketing.

What Does This Mean For ETH?

All of this suggests that ETH may see renewed activity in the coming months, and will potentially outperform bitcoin. On a technical level, ETH/BTC may have bottomed out around o.055. Its high at the top of the last bull market was 0.088 BTC.

There are concerns around an ETH ETF, however, which (like the bitcoin ETFs) would see a large amount of ETH held by custodians such as Coinbase. If these coins were staked, this could create a single point of failure or give certain parties undue and undeserved influence over the network.


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