The Securities and Exchange Commission (SEC) is on the verge of adopting a similar approach to Bitcoin exchange-traded funds (ETFs) when it comes to approving spot Ethereum ETFs. Standard Chartered Bank analysis predicts that approval will be granted on the initial final deadline of May 23. This article analyzes the potential approval of spot Ethereum ETFs and the factors contributing to this outcome.
Geoffrey Kendrick, head of forex and digital asset research at Standard Chartered Bank, anticipates that pending applications for spot Ethereum ETFs will be approved on May 23, which is seen as the equivalent date to January 10 for Bitcoin ETFs. Kendrick further suggests that Ethereum could reach a price of $4,000 by the specified date if it follows a similar trajectory to Bitcoin leading up to ETF approval. He supports the approval of spot Ethereum ETFs based on the SEC’s classification of ether as a non-security in its legal actions against crypto companies. The fact that Ethereum is listed as a regulated futures contract on the Chicago Mercantile Exchange (CME) also adds weight to the expectation of approval.
Scott Johnsson, a financial lawyer, provides insights into the potential roadmap for Ethereum ETFs. While long-term approval for spot Ethereum ETFs is highly likely, Johnsson points out that there may be short-term delays due to ongoing regulatory actions involving Coinbase/Binance securities exchanges. He draws attention to the regulatory path from a plain spot digital asset to a spot ETF offering, using Bitcoin as an example. Johnsson acknowledges that the process for Bitcoin took seven years, involving multiple steps and disapprovals along the way. However, he notes that the timeline for Ethereum is compressing, with applications open for both futures ETFs and spot ETFs. Johnsson suggests that certain prerequisites for spot approval may no longer be necessary, such as Step 3, which requires the SEC to issue a formal 19b-4 approval for the futures ETF.
Johnsson highlights two key factors to understand the SEC’s current approach to future approvals, including Ethereum. Firstly, he discusses the threshold question in the context of the Grayscale ruling, which focused on correlation analysis. Secondly, he emphasizes the SEC’s view, as bounded by the recent BTC approval order, which considers correlation with the CME, a lengthy sample period, intra-day trading data, and consistency throughout the sample period. While the specific threshold for sufficiency remains unknown, the correlation analysis for Bitcoin is within an acceptable range. Therefore, it is expected that Ethereum will likely meet this threshold in the foreseeable future.
Once the required level of correlation is achieved, Johnsson believes that approval for spot Ethereum ETFs is likely to follow shortly after that, with May being the expected month of approval. Industry analysts and experts agree that the SEC’s approval of spot Ethereum ETFs is a matter of time, unless there are significant legal shifts. The current trading price of ETH stands at $2,370, with an increase of over 2% in the past 24 hours and more than 7% in the past seven days, following Bitcoin’s lead.
The SEC’s approval of spot Ethereum ETFs is highly anticipated and expected to occur on or around May 23. Based on current analysis and factors such as the classification of ether as a non-security and Ethereum’s listing as a regulated futures contract, industry experts believe that the approval is a matter of time. However, potential short-term delays due to ongoing regulatory actions cannot be overlooked. Investors are advised to conduct their own research and exercise caution when making investment decisions in the cryptocurrency market, as it carries inherent risks.