Alex Thorn, the head of firmwide research at Galaxy Digital, has suggested a spot Ethereum ETF in May is highly unlikely due to the Securities and Exchange Commission subpoenas and a lack of engagement.
According to reports, the Securities and Exchange Commission is attempting to classify ETH as a security.
Spot Ethereum Approval In May Unlikely
Recent reports have indicated that the Securities and Exchange Commission has issued several subpoenas to crypto firms regarding their relationship with the Ethereum Foundation. This, coupled with the Securities and Exchange Commission’s lack of engagement with ETF applicants, has cast considerable doubt on the approval of a spot Ethereum ETF, according to Thorn. The commission’s stance is markedly different from when it approved spot Bitcoin ETFs in January.
A Fortune report highlighted the Securities and Exchange Commission’s energetic legal campaign to classify ETH as a security. The report cited several subpoenas received by US companies as part of the investigation. Other reports stated that the Ethereum Foundation received a confidential inquiry from an unknown state agency, leading to the removal of the warrant canary from its website.
A former Fidelity Investments veteran, Thorn suggested that the Securities and Exchange Commission could be looking for information regarding the interactions between crypto firms and the Ethereum Foundation. It may also be considering whether Ethereum’s original initial coin offering, held in 2014, was an unregistered securities offering rather than classifying the current secondary trading of ETH as securities trading.
Thorn speculated that while the SEC could draw a distinction between the ICO and the secondary trading of ETH, enforcement action against the Ethereum Foundation after nearly a decade would be “extremely irregular.”
Is ETH A Security?
While SEC Chair Gary Gensler has been noncommittal on whether the commission considers ETH a security, many believe that Ethereum’s shift to Proof-of-Stake has strengthened the SEC’s argument about ETH’s status as a security. Despite this, the SEC allowed the launch of several futures-based Ethereum ETFs a year after Ethereum’s shift to Proof-of-Stake.
Thorn argued that if the Securities and Exchange Commission alleges securities fraud against ETH and the Ethereum Foundation, it would be treading on uncertain legal grounds and could potentially impact a decade-old industry.
Others Doubt ETH ETF Approval Too
Thorn’s views mirror other market experts who have cast doubt on the approval of a spot Ethereum ETF by May. One such individual is Bitwise CIO Matt Hougan, who suggested that delaying the approval of a spot Ethereum ETF could have some advantages as it could allow Wall Street to digest spot Bitcoin ETFs before introducing a new one. He also suggested that delaying approval could also attract more assets.
“I’ll take a maybe controversial view: I hope we don’t get an Ethereum ETF in May. I actually sort of want it to be later. I think Wall Street/traditional finance just started ingesting this giant thing called Bitcoin. And they’re just getting their hands around it. And I think you need to give them longer to digest.”
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
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