Well, this is a fine how-do-you-do. Back in early February, the price of Ethereum was going up, fueled by speculation that the SEC would soon announce their approval of spot Ethereum ETFs. Standard Chartered Bank forecast that the price would reach US$4,000 by May 23, when the SEC will reportedly make their ruling.
Sure enough, Ethereum skyrocketed from around $2,350 on February 1 to a peak of $4,066.60 on March 11. And then it tumbled back down to $3,200 following reports that the SEC is campaigning to classify Ethereum as a security, and not a commodity like Bitcoin.
That $4,000 mark seems a bit more distant now. As we go to press, the odds at BetOnline (find out more with our BetOnline Review), one of our favorite crypto betting sites, have Under $4,000.50 priced at -130 for Ethereum’s closing price at the end of 2024. Here’s the latest scuttlebutt regarding Ethereum ETFs and what’s happening on the ground.
Crypto: Commodity vs. Security
The heart of the problem for Ethereum backers is that their preferred digital coin isn’t the same as Bitcoin. The SEC has ruled that Bitcoin is a commodity, meaning it can be traded on exchanges the same way that you might trade oil, or pork bellies. This cleared the way for the approval of spot Bitcoin ETFs (Exchange-Traded Funds), which in turn has helped fuel the latest Bitcoin boom.
Ethereum, on the other hand, is still considered a security – at least for now. That means it’s more like stocks and bonds, and therefore subject to much stricter SEC (Securities and Exchange Commission) regulation in the United States.
The key difference between these two coins is twofold: one, Ethereum uses proof-of-stake as its consensus mechanism rather than proof-of-work, which the SEC says constitutes a “reasonable expectation” of investment profits; and two, Ethereum is actively headed by founder Vitalik Buterin, rather than the pseudonymous Satoshi Nakamoto, which makes it a “common enterprise” in the eyes of regulators.
Why Is The SEC Going After Ethereum?
It isn’t just about commodities versus securities. CoinDesk reported last week that the Ethereum Foundation, established by Buterin and others in 2014 as the group responsible for maintaining and developing the Ethereum blockchain, was being investigated by a “state authority.” Fortune then reported the authority in question was indeed the SEC.
The exact nature of that investigation has yet to be disclosed, but the SEC has been busy issuing subpoenas and collecting information regarding multiple crypto companies in the U.S. This drive may have been spurred by a March 11 letter from senators Jack Reed and Laphonza Butler, asking the SEC to be stricter with Bitcoin ETF regulation, and avoid approving any other crypto ETFs.
JUST IN: 🇺🇸 Democratic Senators Jack Reed & Laphonza Butler send letter to SEC Chair Gary Gensler requesting he deny other crypto ETFs. pic.twitter.com/IzKngHNsPL
— Watcher.Guru (@WatcherGuru) March 14, 2024
Will Ethereum ETFs Be Approved?
In the long run, probably – but May 23 is looking more and more like a pipe dream. Analysts at Bloomberg have cut their expectation of spot Ethereum ETFs being approved on that date by half, from around 70% to 35%.
That pessimism stems from a combination of the latest SEC activities, and also what they’re not doing: engaging publicly with the people at Grayscale, who are trying to get their Ethereum Trust approved as an ETF for the May 23 deadline. Meetings have taken place, but the SEC has yet to comment, or do much else for that matter. That inactivity is cause for concern when there’s less than two months left on the calendar.
Aren’t Ethereum ETFs Already Approved?
Yes, but not “spot” ETFs which invest directly in Ethereum itself, rather than derivative contracts based on the price of Ethereum. The great thing about spot Bitcoin ETFs is that investors can easily track the price as it rises and falls. This makes them a much more attractive investment compared to futures-based ETFs.
Here’s the good news for Ethereum fans: Delaying the approval of spot ETFs will give Grayscale and other companies more time to accumulate assets, thus strengthening their position for a launch sometime later in the year.
Until then, more good news: The London Stock Exchange just announced before press time that they’ll start a market for Bitcoin and Ethereum ETNs (Exchange-Traded Notes) on May 28. This confirms earlier reports that the LSE would start accepting applications for the second quarter of 2024; those applications will officially start rolling in on April 8.
This announcement has given the price of Bitcoin and Ethereum another boost, with Bitcoin going back over $70,000, and Ethereum trading at $3,640.56 – a 5% increase over Sunday’s prices for both. Crypto goes down; crypto goes up.
BREAKING 📢: The London Stock Exchange has announced that it will accept listing applications for #Ethereum & #Bitcoin ETNs starting April 8,2024!$ETH & $BTC ETNs will begin
trading on May 28, 2024, based on approval 🚀 pic.twitter.com/jyJ377eL6K— Ethprofit.eth 🦇🔊 (@Ethprofit) March 25, 2024
