Regulation
Experts predict change with approval of Ethereum ETFs
The potential approval of Ethereum spot exchange-traded funds (ETFs) by the U.S. Securities and Exchange Commission (SEC) could reshape the crypto industry and its regulation. Industry experts believe that such a move marks a major shift in the US government’s stance on digital assets.
Additionally, they see that such a move could lead to broader acceptance and integration of crypto into the financial system.
Expert Predictions on Spot Ethereum ETF Approval
A recent report indicates that the SEC has asked asset managers to update their 19b-4 filings for listing Ethereum (ETH) spot ETFs. The move has sparked renewed optimism within the crypto community. He also led Bloomberg Intelligence ETF analysts to increase their chances of approval from 25% to 75%.
Alex Thorn, head of research at Galaxy Digital, highlighted the nuanced approach the SEC could take. He suggested that the commission could differentiate between Ethereum as a commodity and Ethereum staked as a product. security. According to Thorn, this strategy would allow the SEC maintains its previous argument while approving Ethereum spot ETFs.
Learn more: Ethereum ETF explained: what it is and how it works
“In this case and perhaps for other reasons, one might expect the SEC to ban ETFs [issuers] to bet on the ETH they hold”, Thorn added.
However, approving Ethereum spot ETFs without allowing staking could be a disadvantage for investors looking for additional yield from staking rewards. Investors who buy, hold and stake ETH can earn staking rewards, which provide additional yield. On the other hand, spot Ethereum ETFs without stake providing exposure to ETH prices without the benefits of staking rewards.
Nonetheless, as Anthony Pompliano, a prominent crypto investor and advocate, states, the approval of Ethereum spot ETFs could increase institutional adoption and general acceptance of digital assets.
“If they [the SEC] approve the Ethereum ETF, they approve the entire industry. This is the last dam to be broken”, Pompliano said.
Policy and regulatory implications
Approval of Ethereum spot ETFs could also be influenced by political considerations, particularly in the next American presidential election. Haseeb Qureshi, managing partner at Dragonfly Capital, noted that Chairman Joe Biden could soften his stance on crypto to gain votes.
Qureshi suggested that the approval of the ETF could be the first sign of this change. He further predicts a gradual easing of regulatory pressures on the crypto sector.
“I’ve been saying for weeks that Biden will ease up on crypto before the election. He doesn’t want to lose votes in a close race on what is ultimately a minor issue for him,” Qureshi said. said.
Ryan Sean Adams, the founder of crypto community Bankless, echoed this sentiment. He suggested that an approval of the Ethereum ETF could signal a major turning point in the Democratic Party’s approach to crypto. He also pointed out that such a move could prevent aggressive regulatory measures such as banking chokepoints and SEC lawsuits and foster support for pro-crypto legislation.
“If the Ethereum ETF is approved on Thursday, I expect it will signal a 180 for the White House attack on crypto,” Adams wrote.
Like Jake Chervinsky, legal director of Variant Fund, noted, the approval of Ethereum spot ETFs could signal a major shift in U.S. crypto policy following the Staff Accounting Bulletin No. 121 (SAB 121) vote. He sees this as potentially more important than the ETF itself.
Contrasting political positions on crypto
Indeed, American political parties have divergent views on cryptography. Former President Donald Trump, supported by the Republican Party, publicly expressed support for crypto. He also said that he accept crypto donations for his presidential campaign and declared his comfort with digital assets.
Additionally, the Republican Party itself is known for promoting crypto-focused legislation. For example, Senator Cynthia Lummis of the Republican Party recently led the passage of HJ Res 109.
During the hearing, she highlighted the dangers of SAB 121. She explained that placing client assets on institutional balance sheets could put those assets at risk in the event of bankruptcy. Additionally, Senator Lummis has long been known for support the crypto industry.
Learn more: How to invest in Ethereum ETFs?
In contrast, the Biden administration has maintained a more cautious approach, with measures such as prohibiting crypto mining companies from acquiring real estate near strategic locations for national security reasons. Furthermore, they have vowed to veto HJ Res 109a resolution to overturn the SEC’s controversial SAB 121. They argue that rescinding SAB 121 would weaken the SEC’s ability to protect investors and the financial system from crypto-related risks.
Additionally, the Democratic Party, which supports Biden, recently made headlines after House Democratic leaders said: they wouldn’t whip against the Financial Innovation and Technology for the 21st Century (FIT21) Bill. Introduced in July 2023, the FIT21 bill aims to establish clear federal requirements for digital asset markets and balance innovation with strong consumer protections.
The evolving regulatory environment and political implications of the upcoming presidential election present the transformative potential of approving the Ethereum ETF. Industry experts and the crypto community will continue to closely monitor these developments, as they could herald a new era of institutional participation and widespread acceptance of digital assets.
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