Filing suggests SEC is exploring grounds to deny spot Ether ETFs

As a researcher with a background in finance and securities law, I find the recent developments surrounding the SEC’s potential labeling of Ether (ETH) as a security rather intriguing. The details unearthed from BlackRock’s March filing with the SEC suggest that the regulator may indeed be reconsidering its stance on ETH’s status.

Experts have uncovered information from a SEC filing in March that hints at the possibility of the securities regulatory body viewing Ether (ETH) as a security.

In a May 13 blog post, Scott Johnsson of Davis Polk and Wardwell discussed BlackRock’s March 4 application to list and trade a spot Ether ETF on the Nasdaq. The filing extended the commission’s decision deadline to June, yet it invited public comment on whether this investment product could be classified as a commodity.

“Johnsson stated that the intention behind this action could be to challenge the validity of the so-called ‘spot filings’ as they might not meet the criteria for commodity-based trust shares if they represent securities instead.”

Filing suggests SEC is exploring grounds to deny spot Ether ETFs

Based on information from Bloomberg ETF analyst Eric Balchunas, the SEC filing for VanEck’s spot Ethereum ETF was deeply concealed within a mass of legal jargon. However, this discovery did not alter Balchunas’ belief that the SEC’s likelihood of endorsing the proposal was minimal. The SEC holds the power to either approve or reject VanEck’s application by May 23, making it the first of several similar petitions under consideration.

If the SEC declines VanEck’s Ether ETF application, it is possible that applications from ARK 21Shares, Hashdex, Invesco Galaxy, BlackRock, and Fidelity for similar spot Ether ETFs may also be rejected. Grayscale recently withdrew its own Ether ETF application on May 7 without providing any explanation. VanEck CEO Jan van Eck expressed skepticism about the SEC’s approval of his company’s offering in May.

The SEC’s decision hinges on whether they classify Ethereum (ETH) as a security or a commodity. Previous statements from Chair Gary Gensler indicating that ETH was not a security have been questioned, as reports suggest an investigation into Ether is underway. Gensler is scheduled to speak at the Investment Company Institute summit in Washington, D.C., on May 23.

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2024-05-15 00:20