Regulation
“What did we just do?” – DL News
- The SEC will likely reject Ethereum ETF spot applications soon.
- Regulators and policymakers first need time to digest the impact of Bitcoin spot ETFs.
- Approving Ethereum ETFs could also lead regulators down a slippery slope.
Bitcoin exchange-traded funds only launched in January.
Now, policymakers and regulators will likely want much more time to digest their impact before committing to anything else.
This was stated by Kinga Bosse, COO of crypto infrastructure company MPCH.
“Going forward, the question is really, ‘Okay, what did we just do?’” Bosse said. DL News.
Now, with a crucial deadline set for May 23, US regulators must now decide whether or not to grant the same approval to Ethereum ETFs.
Former global head of strategic investments and partnerships at banking and custodian giant State Street, Bosse said they might worry that approving Ethereum products would be like “opening a Pandora’s box.”
“Once you’ve done Ethereum, where do you stop? she says. The crypto industry could then push for a Solana ETF, a Chainlink ETF, or even a Dogecoin ETF.
“It’s going to become increasingly difficult for regulators to respond if they have concerns.”
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The Securities and Exchange Commission should either reject or greenlight all applications at once – although analysts and punters say the chances of approval are low.
Take advantage of uncertainty
Fear of a slippery slope is one reason Ethereum’s regulatory status is such a sticking point.
Vitalik Buterin “has a lot to say about what’s happening on Ethereum… which isn’t necessarily a comforting notion.”
— Kinga Bossé
While the SEC and the Commodity Futures Trading Commission both agree that Bitcoin is a commodity – and therefore falls under the jurisdiction of the CFTC – SEC Chairman Gary Gensler has been cautious about his stance on the Ether.
The CFTC, for its part, argued that Ether is a commodity.
Regulatory uncertainty “gives the SEC ammunition to push back” on Ethereum ETFs, Bosse said, adding that the agency is unlikely to move forward with the products until the issue is resolved .
Reasons for uncertainty
But this hesitation has more practical reasons.
Whether it’s Ethereum or Bitcoin, “there is a concern about how these things are actually controlled,” Bosse said.
The fact that Ethereum recently underwent a major upgrade – users can now stake Ether to secure the network and be financially rewarded for it – can be seen as problematic.
After all, who decides which upgrades Ethereum undergoes?
Bosse said that Ethereum creator Vitalik Buterin “has a lot to say about what happens on Ethereum, so it’s not necessarily a comforting notion.”
And the fact that members of Congress are still considering a digital asset as simple as Bitcoin doesn’t make things any easier.
“There is a small group of policymakers who really understand crypto,” Bosse said. “But many others have questions about the effects of crypto on the global landscape. They are very concerned about the replacement of the US dollar by cryptocurrencies.
The stakes are high
Other countries – like Hong Kong, Canada or Singapore – can experiment with new products without fear of global consequences.
But because they are responsible for the world’s largest economy, American regulators and policymakers don’t have that luxury.
“When the SEC makes a decision, it makes a decision for the entire global market,” Bosse said.
“There’s not a lot of room for error.”
Tom Carreras is markets correspondent for DL News. Do you have a tip on Ethereum ETFs? Contact us at tcarreras@dlnews.com