Regulation
Outdated securities laws could delay Ether ETF approval
The U.S. Securities and Exchange Commission will likely decide the fate of two proposed spot ether (ETH) exchange-traded funds this week, and cryptocurrency advocates are bracing for disappointment. The deadline for the VanEck and ARK Invest ETFs is May 23, and some investors fear that a rejection could lead to a crypto sell-off.
If ETFs are not approved, it will likely be due to fraud and security issues arising from insufficient regulatory framework on cryptocurrency. Most laws regulating securities have been in place for decades and lack the bandwidth to address cryptocurrencies and digital assets.
“Without cops on duty, investors are forced to strike out on their own outside of the investment advisory community because the community can’t help them, because we don’t know what the rules are,” Ric Edelman, head of Digital, told CNBC the Asset Council of Financial Professionals. “They are ending up in scams and fraud.”
Hesitant acceptance
After the recent launch of the bitcoin ETF, cryptocurrency investors were hoping that ether ETFs were next in line. However, the SEC only agreed to bitcoin ETFs because it lost a legal battle. Following the reluctant approval, SEC Chairman Gary Gensler released a statement warning investors the risks of investing in cryptocurrency.
The SEC aims to take a wait-and-see approach to carefully review the performance of bitcoin ETFs before approving any other crypto funds. One of the reasons Gensler endorsed bitcoin ETFs is because bitcoin was the only cryptocurrency that he considered a commodity, not a security.
Ether is a more complex cryptocurrency than bitcoin, so the fee almost certainly seems hesitant. The SEC is also concerned that the approval of an ether ETF could open the door to a wave of funding in cryptocurrencies and digital assets.
Unlikely odds
Due to these factors, the crypto community has increased the odds 7% Ether ETF Approved Some experts, however, believe there is a 30%-35% chance that the two ETF applications will win approval.
If denied, ether ETF providers could follow the same path as bitcoin ETF companies and take legal action against the SEC. While they might win in the end, a lengthy court battle could keep ether ETFs out of the market for some time. It would also disappoint Grayscale and Bitwise, whose apps are next to be cut.
The cryptocurrency market has been strong in recent months, thanks in part to the approval of the bitcoin ETF, and ETH holders are hoping that an SEC rejection won’t hinder that recovery. ETH is currently up more than 32% year to date.