At least 16 applications for Ethereum or Bitcoin-Ethereum futures ETFs are pending regulatory approval in the US. So what will the United States Securities and Exchange Commission (SEC) decide?
SEC likely to approve Ethereum ETFs
The SEC is likely to approve multiple simultaneous applications for Ethereum futures exchange-traded funds (ETFs), the Wall Street Journal reported, citing sources familiar with the matter. Since July, the regulator has been flooded with applications from various investment firms, including requests that combine Bitcoin futures (BTC) and Ethereum strategies. As of now, the SEC has not instructed firms to withdraw their applications. This is a change from 2021, when firms were instructed to withdraw similar applications. According to WSJ sources, this indicates that the regulator will not block the launch of the fund in a few weeks.
At least 16 applications for Ether or Bitcoin-Ether futures ETFs are pending regulatory approval. ETH is the native token of the Ethereum Blockchain. There is also the possibility to use it for peto-peer transactions within the decentralized network. A crypto futures ETF tracks the performance of crypto futures contracts. For example, instead of investing directly in Bitcoin or Ethereum, a crypto futures ETF invests in futures contracts that are tied to the price of these digital assets.
UPDATE: Here's what the #Ethereum futures ETF filings race looks like. This is a list of all filings including withdrawn AND the 16 active filings. Notice @ValkyrieFunds' date on $BTF currently looks to be the leader absent some action from SEC — 10/3/23 https://t.co/DgZpDVbEqO pic.twitter.com/CYEcTJnkx8
— James Seyffart (@JSeyff) August 16, 2023
SEC continues to receive requests
The SEC continues to receive requests as crypto futures appear likely to be approved. cryptocoin.com Earlier this week, asset management firm Valkyrie filed an application for an Ethereum futures ETF, in addition to a previous application combining the Bitcoin-Ethereum futures strategy. Valkyrie takes first place in this race. Therefore, it is possible for the BTC-ETH ETF to launch in early October.
In the ETF industry, first mover advantage is imperative. According to the WSJ, citing data from Morningstar, the first ProShares-approved futures Bitcoin ETF has raised $1 billion in assets under management since its inception in October 2021, while Valkyrie’s similar product launched a few days later in assets under management. raised approximately $28 million.
Analyst: SEC cannot approve Ethereum Futures ETF!
Adam Cochran, partner at Cinneamhain Ventures, states in a recent post that the SEC cannot simultaneously claim that ETH is a new unregistered internal “crypto-asset security” and approve an ETH Futures ETF.
Whether people want to admit or not, Adam is 💯 correct here. And if the SEC approves an ETH Futures ETF, I agree it is favorable to any potential appeal involving XRP. https://t.co/3GCbHl99tc
— John E Deaton (@JohnEDeaton1) August 18, 2023
“You can’t have a futures ETF made from an unregistered security,” the crypto analyst says. According to him, the SEC needs to recognize that Ethereum (ETH) is a commodity or a currency. Also, under Howey, he should go back to attacking the transactional issue only. In this context, Cochran adds:
So if the SEC approves an Ethereum futures ETF, it essentially acknowledges that Ethereum itself is not a security. Despite the way it’s sold, it’s Proof-of-Stake (PoS), despite its purpose and use. This is a big win.
SEC’s approval has the potential to affect other lawsuits
Adam Cochran also says that this move by the SEC is something Ripple could bring up in the SEC-Ripple lawsuit. Because he states that it clearly shows that there is a matter of distinction between the asset itself and its sale. However, the analyst explains that this does not mean that virtually all crypto assets are not securities. “However,” adds Cochran.
It means the SEC has acknowledged that there is a line somewhere. Now we have to litigate about where the line is rather than whether the line exists.
Pro-XRP attorney John Deaton evaluated Cochran’s interpretation of the situation. Deaton says Cochran is 100 percent right here. Deaton suggests that if the SEC approves an Ethereum Futures ETF, it will also favor any potential appeal involving XRP.
