Chairman Atkins highlighted Ethereum’s central role in the crypto sector and pointed out its importance as foundational infrastructure for the layer-2 ecosystem. He reaffirmed that securities laws do not apply to Ethereum. While the official stance is yet to be finalized, the SEC “unofficially” does not consider ETH a security. 

Institutional Demand and ETH Price Surge

Atkins welcomed institutional firms’ adoption of ETH, calling it a positive indicator for the sector’s growth. This development has driven demand for Ethereum, pushing its price close to $4,000. 

Notably, companies such as BTCS, SharpLink Gaming, and Gamesquare are adding ETH to their portfolios. Moreover, Ether Machine is preparing for an IPO with $1.6 billion worth of ETH capital. ETH ETFs are also attracting massive inflows. In recent weeks, ETH ETF funds have seen record-breaking investment entries. 

Meanwhile, the Commodity Futures Trading Commission (CFTC) also supports classifying ETH and Bitcoin as commodities. However, there are still regulatory uncertainties around ETH staking. The SEC has delayed decisions on Ether-based staking ETF applications, while institutions like BlackRock continue to submit filings in this area.

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According to Bloomberg ETF analysts Eric Balchunas and James Seyffart, the SEC has taken additional time to return the S-1 forms submitted by prospective spot Ethereum ETF issuers, delaying the launch. Balchunas noted that this new timeline suggests a mid-to-late July launch.

ETF Store president Nate Geraci mentioned that the last round of S-1 revisions was relatively minor and predicted that the SEC would clear issuers for trading within 14–21 days. Although the exact timeline remains uncertain, the SEC has indicated a potential launch this summer.

The approval of the S-1 forms is the second part of a two-step process required for the ETFs to go live. The first part involved the approval of the issuers’ 19b-4 forms in May. The SEC approved 19b-4 filings from eight ETF bidders on May 23.

On June 26, SEC Chairman Gary Gensler confirmed that the approval process for spot Ether ETFs is progressing smoothly. The SEC has approved a rule change allowing major issuers, including BlackRock, Fidelity, 21Shares, Grayscale, Franklin Templeton, VanEck, iShares, and Invesco, to participate in the process. Additionally, issuers such as VanEck have filed 8-A forms preparing for listing on exchanges by July 8.

However, Gensler indicated that listing spot Ether ETFs on stock exchanges could take months and may not happen until September. He emphasized that the timing of the Ether ETF listings depends on the critical’ response times.

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Speaking at a Bloomberg conference on June 25, Gensler did not give a specific date for when the ETFs would be launched and avoided answering the question of whether they could be launched before the US elections.

“This is really about asset managers making full disclosure so that these registration statements can become valid,” he said. “What we have before us — and this is done at the staff level — are registration statements, disclosure statements. These explanations are really important. It is important for investors to make investment decisions.”

The SEC approved 19b-4 filings from eight ETF claimants on May 23, but asset managers are still filing their Form S-1s — the final filings the SEC must approve for trading to begin.

Some analysts predict that the SEC may approve the funds for trading, and they state that this approval could occur in the first week of July.

The US crypto industry has sought to make digital assets an election issue, spending millions of dollars following multiple enforcement actions from the SEC led by Gensler. Presidential candidate Donald Trump said he would end what he called President Joe Biden’s “war on crypto,” and billionaire investor Mark Cuban claimed Gensler could cost Biden the election.

When asked about Trump and Cuban’s comments, Gensler stated that he was not talking about the election.

“We have a pretty clear set of rules. “There is no inconsistency between crypto securities and securities laws,” he said. “Unfortunately, there are many people who are not in compliance with the law.”

Gensler claimed there were as many as 20,000 crypto tokens that were investment contracts or securities under US law and did not provide “proper disclosure” to American investors.

“This is an area where the leading lights from a few years ago were either in prison, about to go to prison or awaiting extradition,” he said. “We’re bringing these things before the courts, and those processes are going to be gamed because people who don’t follow the law are hurting the American people.”

Ripple CEO Brad Garlinghouse called Gensler’s comments “complete nonsense” and claimed that the SEC chairman “completely missed FTX.” “Gensler will cause Biden to lose the election,” Garlinghouse added.

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The approval of Ethereum ETFs by the U.S. Securities and Exchange Commission (SEC) has sparked debate about whether ether (ETH) is considered a security. Legal experts are divided on the implications of this approval.

The SEC’s jurisdiction over ether has been unclear. SEC Chair Gary Gensler has not definitively stated whether ether is a security. However, a recent complaint by Consensys suggested that the SEC may view ether as a security.

Conversely, Commodity Futures Trading Commission (CFTC) Chair Rostin Behnam has labeled ether as a commodity.

Last Thursday, the SEC approved 19b-4 forms for eight Ethereum ETFs, but issuers must have their S-1 registration statements go effective before trading begins. Opinions vary on whether this signifies a shift in the SEC’s stance on ether.

Paul Grewal, Chief Legal Officer at Coinbase, described the SEC’s approval as a pivotal moment in the debate over ether’s status. He criticized the SEC for not clearly stating its position on whether ether is a security or a commodity.

Grewal noted that by requiring the use of the S-1 form, the SEC implies that these funds do not predominantly contain securities, suggesting ether might not be classified as a security.

The SEC did not respond to requests for comment.

Others, such as Coy Garrison, former counsel to SEC Commissioner Hester Peirce, argued that ether must be a commodity following the approval of spot Ethereum ETFs. Garrison highlighted that the SEC’s approval order refers to the funds as “commodity-based trust shares,” indicating that classifying ether as a security would have been inappropriate under current exchange rules. Garrison, now a partner at Steptoe LLP, maintains that this approval aligns ether with commodities.

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The United States Securities and Exchange Commission ( SEC ) has recently announced a postponement in its decision regarding seven prominent applicants seeking approval for a spot Bitcoin exchange-traded fund  ( ETF ) in the United States.

On August 31, the SEC filed a series of documents in which it stated the necessity for additional time to conduct a comprehensive assessment of the proposed rule changes required to permit the listing of spot Bitcoin ETF s on the stock exchange. This delay affects seven applicants, including BlackRock, the world’s largest asset manager, as well as VanEck, WiseOrigin, Invesco Galaxy, WisdomTree, Bitwise, and Valkyrie Digital Assets.

JUST IN: SEC is opting to delay (as expected) on spot bitcoin ETF deadlines pic.twitter.com/W4JjOji6L2

— Eric Balchunas (@EricBalchunas) August 31, 2023

Although the proposed rule change was published on July 19 for public input, the SEC has stayed within the 45-day response period. Opting for an additional 45-day extension, the SEC has shifted the decision date for five applications to October 17. Despite the varying deadlines for these applications, with Bitwise’s deadline set for October 17 and Valkyrie Digital Assets’ deadline for October 19, the language in all the filings remains similar. They indicate that these proposed dates are when the SEC anticipates making a decision to either approve, disapprove, or initiate proceedings to determine whether to disapprove the proposed rule changes.

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Grayscale’s Triumph and Market Uncertainty

Interestingly, this development comes shortly after Grayscale Investments succeeded in appealing an initial SEC decision that rejected the listing of its spot Bitcoin ETF. On August 29, the United States Court of Appeals for the D.C. Circuit ruled in favor of Grayscale, prompting a reevaluation of their application. This victory has led to increased optimism in the market, with Bloomberg analysts now giving a 75% probability assessment for the launch of spot Bitcoin ETF in 2023.

Furthermore, the SEC has recently added another obstacle to the joint spot Bitcoin ETF from Ark Invest and 21 Shares, known as the Ark 21Shares Bitcoin ETF. On August 11, this product faced its third setback in terms of an outcome date, following previous rejections in 2021 and earlier this year.

In summary, the SEC’s decision to postpone its rulings on these six spot Bitcoin ETF applications, along with the Grayscale case developments, has generated significant anticipation and uncertainty in the cryptocurrency market, with market participants eagerly awaiting further regulatory clarity.

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Grayscale, which had submitted a Bitcoin Spot ETF application in the past few months, filed a lawsuit after the SEC rejected their ETF application. The decision from the court had been eagerly awaited for weeks. In breaking news, it has been reported that the court has ruled in favor of Grayscale. Following the decision, the SEC has revoked its rejection of the spot ETF application.

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Here is the opinion issued by the presiding judge in the case:

“Grayscale has presented undeniable evidence, showing a 99.9% correlation between the Bitcoin spot market and the CME futures price. The SEC has failed to adequately explain why it approved two Bitcoin futures ETPs while denying Grayscale‘s proposed Bitcoin ETP. In the absence of a coherent explanation, the unequal regulatory treatment of similar products is deemed unlawful. Consequently, we have accepted Grayscale‘s request for a review and have overturned the Commission’s decision.” As a conclusion, Grayscale Wins the Lawsuit!

Grayscale remarked, “The court’s decision marks a significant milestone for both the Bitcoin ecosystem and American investors.”

After the ruling, Bitcoin underwent a sudden surge, reaching levels around $27,700.

Further details are currently being updated…

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According to information conveyed by Bloomberg, the SEC might accommodate these ETF requests. However, Bloomberg does not disclose the sources behind this news.These sources also state that the blocking of these ETFs is unlikely. Following a significant market downturn, this news further eased investors’ concerns. After an almost $800 million liquidation in the market, prices began to turn upwards. This news remains a key factor supporting the upward trend.

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In fact, according to the reported news, starting October 1st, these ETFs will begin trading on exchanges. Among the companies applying are several like Volatility Shares, Bitwise, Roundhill, and ProShares. Their approval would bring significant speed and popularity to the cryptocurrency markets.

Furthermore, the potential approval of these ETFs could mark a significant milestone in the broader acceptance and integration of cryptocurrencies into traditional financial markets. This move might also attract more institutional investors who have been waiting for a regulated and standardized way to invest in cryptocurrencies. The listing of Ethereum ETFs on exchanges could potentially increase accessibility for retail investors as well, making it easier for a wider range of individuals to participate in the crypto market without the complexities of directly holding and managing cryptocurrencies.

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