SEC Plays Defense: Ethereum ETF Faces Extra Innings

The U.S. Securities and Exchange Commission (SEC) has played a strategic hand, deferring its decision on the proposed spot Ethereum Exchange-Traded Funds (ETFs), very recently, from Wall Street juggernauts BlackRock and Fidelity. It’s a palpable suspense, leaving the crypto realm abuzz with curiosity — what implications does this hold for Ethereum, and why does the SEC extend the game with additional innings, inviting public commentary?

The Chase Unfurls

The Ethereum ETF, a potential game-changer, pledges to bridge the gap between the crypto domain and traditional investments. The stage is set, a lineup of eager contenders awaits, and the atmosphere crackles with electric competition — the stakes are high, and the race is unmistakably ON.

Yet, this isn’t just another day at the office for the SEC. Far from stalling progress, the SEC plunges into the nitty-gritty, putting these ETF proposals under the microscope. The regulator seeks not just contemplation but an in-depth dissection, inviting public commentators to spotlight their insights on arguments championed by Fidelity, BlackRock, Cboe, and Nasdaq heavyweights.

In this regulatory stage, the SEC isn’t just contemplating; it’s asking the pivotal question: Do the compelling narratives that paved the way for the green-lit spot Bitcoin ETFs gracefully waltz over to ETFs embracing Ethereum’s ether?

SEC Keeps Cards Close to Its Chest

SEC Chairman Gary Gensler, in an interview last week, remained tight-lipped regarding spot Ethereum ETFs. When grilled about a potential decision timeline, Gensler indicated that the process mirrors that of Bitcoin ETFs, offering no insights into the current status or timeframe.

And get this — he’s sticking to his guns on the whole investment approval thing. According to him, giving the green light doesn’t mean the SEC’s suddenly chill about Bitcoin risks. Nope, this reticence harks back to the landmark Grayscale v. SEC case, where the SEC was taken to task for its inconsistent stance on Bitcoin futures versus spot ETFs.

When the SEC big shot was asked whether Bitcoin itself was the issue or if it was being misused, he didn’t hold back. “This is a field that has been rife with fraud and manipulation, and look at all the bankruptcies,” he said, before saying, “It’s entity, after entity, after entity.”

Industry Bullish on Ethereum ETF Potential

Geoff Kendrick, the head of FX Research, West, and Digital Assets Research at Standard Chartered anticipates Ether’s price to surge to $4,000 by the projected approval date of May 23, riding on a similar trajectory to Bitcoin during its ETF approval process. 

“We expect pending applications for ETH U.S. spot ETFs to be approved on May 23, the final deadline for the first of the ETFs under consideration — the equivalent date to Jan. 10 for BTC ETFs,” Geoffrey Kendrick, head of Standard Chartered Bank’s forex and digital assets research, wrote in a report. “If ETH prices perform similarly to how BTC prices performed in the lead-up to BTC ETF approval, ETH could trade as high as $4,000 by then.”

But hold your horses, there are a few ifs and buts here. Kendrick’s prediction relies on some key factors, like a continued lukewarm market sentiment for approval, possible misjudgments in implied volatility, and the SEC giving the nod to multiple applications at once. The report also says Ether is less likely to get rocked by the same selloffs that Bitcoin faced post-ETF green light. Kendrick put it bluntly, “These factors should make ETH less vulnerable than BTC to a post-approval selloff.”

Gracy Chen, managing director at Bitget is all in on the potential of an Ethereum ETF. It’s not just about easing the path for traditional investors; it’s about pumping liquidity into the Ethereum market. Think about the Bitcoin ETF ripple effect — that could be Ethereum’s future.

• “An Ethereum spot ETF makes it easier for traditional investors to get exposure to Ethereum without directly owning or managing cryptocurrencies. This increased accessibility could attract a broader range of investors, including institutional investors who might prefer traditional investment tools,” the Bitget managing director told The Shib.
• “ETFs listed on traditional stock exchanges usually have higher liquidity than the underlying assets. The introduction of an Ethereum spot ETF could bring additional liquidity to the Ethereum market, making it easier for investors to buy and sell ETH. After BTC’s ETF went live, there was a significant boost in liquidity, and the sale of billions of dollars in BTC did not cause significant price fluctuations,” Chen, who is a self-proclaimed crypto nerd, further said.

The Security Question: Is Ethereum a security? The SEC’s been tight-lipped, leaving everyone guessing. But, according to Chen, an Ethereum ETF thumbs-up could signal Ethereum’s solidifying reputation as a legit asset class.

• “In previous official responses, the SEC has not explicitly stated that ETH is not a security, but it hasn’t classified it as one either. SEC Chairman Gensler has been ambiguous on whether Ethereum and its stablecoins (like WETH) fall under the category of securities. ETH is often held as an investment, suggesting it could be classified as a security, but it is also widely used as a daily exchange medium across protocols, making its function more akin to cash. Similar to Bitcoin, the approval of an Ethereum ETF could be seen as a positive signal for market sentiment. This may indicate that Ethereum is gradually being viewed as a legitimate and investable asset class, potentially boosting investor confidence,” the Bitget executive noted.

Analysts’ Countdown 

Bloomberg Intelligence’s ETF Analyst, James Seyffart, and Standard Chartered align on the SEC’s likely decision timeline, eyeing May 23, 2024, as a pivotal date for Ethereum ETF hopefuls, potentially setting a precedent akin to the Bitcoin ETF approvals.

As the SEC sifts through the details and the crypto community buzzes with anticipation, Ethereum’s quest for ETF approval transcends mere regulatory hurdles — it’s a window into the future of cryptocurrency investment, brimming with suspense, strategy, and speculation.

If (and that’s a BIG IF) the Ethereum ETF struts onto the scene, it’s like a gallon of rocket fuel is thrown into the crypto bonfire. This means more mainstream players will hop aboard the crypto rollercoaster, and as a domino effect, this could mean a heightened crypto fever. 

Now, what’s in it for the Shib ecosystem?

In the vast Shiba Inu universe, it’s akin to capturing a gentle sprinkle of celestial stardust. Imagine the entire market ensnared in a tempest of exhilaration, with Shiba Inu, the darling of the Shib ecosystem, gracefully riding the crests of crypto euphoria. Beyond mere trading, it unfolds as a meticulous choreography, orchestrating Shiba Inu’s poised maneuvers in the grand spectacle of the crypto dance-off.

Recent days witnessed SHIB’s soaring surge, a remarkable 288.78% in the last 30 days — a testament to its strength, even without the Ethereum ETF factor.