Following the introduction of Bitcoin ETFs in January, the cryptocurrency industry has been anxiously awaiting the US Securities and Exchange Commission’s decision on Ethereum. Finally, in May, just when hope seemed to be dwindling, the commission gave the green light by approving the 19b-4 forms for spot Ether ETFs.
Taha Abbasi, the CTO at Ferrum Labs, emphasized the significance of this decision, seeing it as a crucial step towards widespread adoption. “It demonstrates to the world that L1 and related assets are operating as intended and are now officially recognized by regulatory bodies,” Abbasi stated in an interview with crypto.news.
The unexpected yet highly anticipated move has raised questions about how regulators perceive the second-largest cryptocurrency. Is Ethereum no longer considered a security? Could it be classified as a commodity instead? Ether ETFs have been placed under the Securities Act of 1933, a less stringent regulation compared to the Investment Company Act of 1940 which imposes stricter rules on investment companies.
While this decision does not provide a definitive answer on the status of ETH, Abbasi believes it reflects a balanced regulatory approach that acknowledges the unique nature of digital assets. He cautioned against drawing premature conclusions, highlighting that the recent approval focuses on the ETP product’s compliance with securities offerings regulations rather than definitively classifying ETH itself.
Abbasi also pointed out the SEC’s reluctance to clarify ETH’s classification as a strategic move to maintain control and flexibility over the cryptocurrency sector. He urged market participants to remain vigilant, adhere to existing regulations, and stay informed about regulatory developments.
One key aspect of the recent approval was the exclusion of staking within these ETFs, as the SEC views staking as an unauthorized offering by cryptocurrency platforms. Despite this setback, Abbasi believes ETP issuers can still attract investors by targeting specific segments and effectively communicating the strengths of their products.
While the commission has yet to approve the S-1 registrations for the ETF filings, experts predict a potential June launch for the ETF product. Abbasi, however, estimated a more realistic timeline of “6 to 18 months” before Ether ETFs become available for trading on exchanges.
In conclusion, Abbasi advised market participants to remain informed about regulatory developments and actively engage in the public comment process to positively influence the outcome.