Ethereum Spot ETF Expected to Be Approved Soon? Industry Opinions Vary

More than a month after the U.S. Securities and Exchange Commission ( SEC ) approved 11 Bitcoin Spot ETFs, the crypto industry is now anticipating that the Ethereum Spot ETF may receive similar approval as early as May. Interviews with multiple parties indicate that the outlook for the approval of the world's second-largest digital asset spot product in 2024 is optimistic, a view shared not only by the cryptocurrency industry but also by some securities lawyers and traditional Wall Street participants.

However, some individuals remain skeptical. Some point out that the SEC chairman's stance on the legality of Ethereum has always been ambiguous, believing it may be an unregistered digital security, and therefore not suitable for an ETF. Another concern is that, compared to Bitcoin, Ethereum lacks sufficient foundational and institutional support in the financial industry.

Despite these concerns, several securities lawyers have stated that the approval process for the Bitcoin Spot ETF provides a blueprint for the approval of the Ethereum ETF. Marc Powers, a blockchain professor at Florida International University College of Law and former SEC enforcement attorney, believes that when the same factors in the Bitcoin Spot ETF approval are also at play here, the SEC will find it difficult to present new reasons to deny the Ethereum Spot ETF.

Due to Grayscale's victory in the court appeal, nearly ten Spot Bitcoin ETFs were approved on January 10. The Washington D.C. Circuit Court supported Grayscale's position, stating that the SEC's rejection of its application was "arbitrary and capricious." This ruling is seen as a significant watershed moment for the cryptocurrency industry.

Another reason for the approval of another Ethereum Spot ETF is the growing demand from major Wall Street firms. Several companies managing a total of $13.5 trillion in assets have applied to launch an Ethereum Spot ETF. Andrew Keys, co-founder of DARMA Capital, pointed out that many Wall Street firms building applications on the Ethereum blockchain see its long-term business value.

As of recent, the price of Ethereum is $2837 per coin, and the price of Bitcoin is $52301. Together, they account for over 50% of the nearly $2 trillion cryptocurrency market.

Experts also pointed out that the existence of the Ethereum futures market is another reason why the SEC finds it difficult to reject a Spot Ethereum ETF. CME launched Bitcoin futures in 2017 and Ethereum futures in 2021.

However, some believe that the SEC is overly optimistic about approving an Ethereum Spot ETF in 2024. The SEC chairman's ambiguous stance on whether Ethereum is a security is seen as a potential obstacle. After Ethereum's upgrade to the PoS mechanism in 2022, there are speculations that this may affect its status in the eyes of the SEC.

Investment bank TD Cowan expects that the SEC will ultimately approve the Ethereum Spot ETF, but it may have to wait until after the November elections. Analysts believe that the political ambitions of the SEC chairman could influence his decisions.