• ETF specialist James Seyffart says Ethereum has achieved commodity status even if the SEC refuses to admit it.
  • He says the financial regulator will not brand ETH a security, lest they fall out with the CFTC.
  • In his opinion, the second largest crypto by market cap deserves the same treatment as Bitcoin, potentially getting an ETF approval in 2024.   

Ethereum (ETH) price took its own path to release itself from its leash to Bitcoin (BTC) as institutional players pursue exchange-traded funds (ETFs) for both product lines. Just as in the BTC market, ETH community members have reacted to developments around spot Ether ETFs.

Also Read: Ethereum price outperforms Bitcoin on speculation that SEC may approve ETH futures ETF sooner

Ethereum is a commodity, but SEC will not admit it: James Seyffart

Ethereum (ETH) has achieved the status of a commodity even if the US Securities & Exchange Commission (SEC) will not admit it. These are the words of James Seyffart, an analyst with Bloomberg Intelligence, adding that the financial regulator has engaged in multiple actions for the past five years (since 2018) showing that it actually acknowledges Ether in that sense.

According to Seyffart, the financial regulator and its Chair, Gary Gensler, will not clearly state out loud the commodity status of Ether in the same way they do for Bitcoin. Nevertheless, he articulates that the second largest cryptocurrency by market capitalization deserves to be a spot exchange-traded fund (ETF) product just as much as the king of crypto, BTC.

We expect the SEC to treat it [ETH] more like Bitcoin and approve spot Ethereum ETFs in 2024.

In his opinion, the SEC’s reluctance to deem Ethereum a security is because it would put the agency at odds with the Commodities Futures Trading Commission (CFTC), its sister regulator overseeing the derivatives market.

In 2021, the global marketplace for futures and options trading in various asset classes, commonly termed CME, informed the CFTC that it intended to list Ether futures, adding that it had the option to do so as a standard futures or securities futures product.

Crypto ETF FAQs

What is an ETF?

An Exchange-Traded Fund (ETF) is an investment vehicle or an index that tracks the price of an underlying asset. ETFs can not only track a single asset, but a group of assets and sectors. For example, a Bitcoin ETF tracks Bitcoin’s price. ETF is a tool used by investors to gain exposure to a certain asset.

Is Bitcoin futures ETF approved?

Yes. The first Bitcoin futures ETF in the US was approved by the US Securities & Exchange Commission in October 2021. A total of seven Bitcoin futures ETFs have been approved, with more than 20 still waiting for the regulator’s permission. The SEC says that the cryptocurrency industry is new and subject to manipulation, which is why it has been delaying crypto-related futures ETFs for the last few years.

Is Bitcoin spot ETF approved?

Bitcoin spot ETF has been approved outside the US, but the SEC is yet to approve one in the country. After BlackRock filed for a Bitcoin spot ETF on June 15, the interest surrounding crypto ETFs has been renewed. Grayscale – whose application for a Bitcoin spot ETF was initially rejected by the SEC – got a victory in court, forcing the US regulator to review its proposal again. The SEC’s loss in this lawsuit has fueled hopes that a Bitcoin spot ETF might be approved by the end of the year.

Potential impact of the SEC publicly acknowledging Ethereum as a commodity

Just as the Ripple (XRP) victory has boded well for altcoins that had been previously labeled securities – including Solana, Cardano, and Polygon –  and as the Grayscale victory augured well for the spot ETF race, labeling Ethereum a security would have a similar effect for the altcoin community. Specifically, it would give altcoins better grounds to push for the same label.

Nevertheless, it would increase investor confidence, inspiring an influx of capital into the ETH market, potentially driving up Ethereum price.

According to one Crypto X community member, the status of Ethereum “could be an issue that comes up at day 90 for the spot ETH 19b-4 filings.” The SEC will then have to state the reasons for which it is contemplating disapproval (if it actually gets to this point) in the order instituting proceedings to determine whether to approve or disapprove a spot ETH ETF.

Nevertheless, Seyffart says that “If Ether is a security, then the CME futures likely need to be delisted and so do the Ether futures ETFs.” Such an outcome would spur turbulence in the regulatory corridors, putting the SEC against the CFTC and reducing the odds of a spot Ether ETF approval.

In Seyffart’s option, this is because the CFTC has considered Ethereum a commodity for years, subject to its regulatory jurisdiction. In the same way, Ether futures have been listed for years on CFTC-regulated exchanges, while cleared Ether swaps have been listed for trading on CFTC-regulated swap execution facilities that are not registered with the SEC without being considered “mixed swaps” subject to joint CFTC and SEC jurisdiction. 

In retrospect, if the SEC were willing to go down a route where they are at odds with the CFTC, then they would not have allowed Ethereum futures ETFs to list on SEC-regulated exchanges.

 

 

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Join Telegram

Recommended content


Recommended Content

Editors’ Picks

Base to decentralize further with fault proofs, testnet launch expected mid July

Base to decentralize further with fault proofs, testnet launch expected mid July

Base, Coinbase’s Layer 2 chain plans further decentralization through the launch of fault proofs and higher community participation. Fault proofs are expected to go live for Base Sepolia testnet by mid July. Base has noted a spike in usage between Q1 and Q2 with applications like Uniswap, 1inch, and Circle among others. 

More Cryptocurrencies News

These seven altcoins are down over 40% from their all-time highs, recovery likely with latest developments

These seven altcoins are down over 40% from their all-time highs, recovery likely with latest developments

Crypto market capitalization excluding Bitcoin is down 3% in the past seven days and nearly 10% in the past 30 days, per TradingView. The shrinking market capitalization indicates that capital is flowing out of altcoins, the altcoins have likely wiped out their value over time in the ongoing cycle.

More Cryptocurrencies News

Ethereum holders keep accumulating Ether ahead of ETF and new yield opportunities

Ethereum holders keep accumulating Ether ahead of ETF and new yield opportunities

Ethereum’s long-term holders have continued scooping up Ether while Bitcoin’s long-term holders shed their holdings. New yield opportunities in Ether, and the upcoming ETF are likely behind the divergence in the behavior of the long-term holders of BTC and ETH. 

More Ethereum News

Crypto trader loses over $11 million in phishing attack, exploited for Maker and Ethena tokens

Crypto trader loses over $11 million in phishing attack, exploited for Maker and Ethena tokens

Maker on-chain metrics paint a bearish picture. A wallet address suffered an exploit for 3,657 MKR tokens worth $8.7 million and 2.56 million Ethena tokens worth $2.4 million. MKR was hit by a correction and gained ground, posting 1.11% gains on Sunday. 

More Cryptocurrencies News

Bitcoin: Is BTC out of the woods?

Bitcoin: Is BTC out of the woods?

Bitcoin (BTC) appears poised for a slight decline this week, influenced by factors such as the German Government's deposit of over 1,700 BTC in exchanges, decreasing outflows in US spot ETFs, and on-chain data indicating no signs of BTC DeFi liquidation. Technical indicators suggest BTC might experience a 3% correction in the near term before continuing its upward trajectory.

Read full analysis

BTC

ETH

XRP