Ethereum ETF Expected to Be Approved? Industry Opinions Vary

More than a month after the historic approval of multiple Bitcoin spot ETFs by the U.S. Securities and Exchange Commission, the crypto industry currently anticipates that an Ethereum spot ETF could receive similar approval as early as May.

According to multiple interviews, there is a generally optimistic outlook regarding the approval prospects of the world's second-largest digital asset spot product in 2024. This view is held not only by the cryptocurrency industry but also by some securities lawyers and traditional Wall Street participants.

However, there are also skeptics. Some argue that regulatory agencies have had a somewhat ambiguous stance on the legality of Ethereum, considering it may be an unregistered digital security, thus making it unsuitable for an ETF. Another concern is that, compared to Bitcoin, Ethereum lacks broad foundational and institutional support in the financial industry.

Putting aside these concerns, some securities lawyers have stated that the approval process for the Bitcoin spot ETF provides a blueprint for the approval of the Ethereum ETF. A blockchain professor at Florida International University College of Law and former regulatory attorney stated that when the same factors in the approval of the Bitcoin spot ETF also apply here, regulators will find it difficult to present new arguments to reject the Ethereum spot ETF.

Due to a cryptocurrency asset management company winning a court appeal against regulators last August, nearly ten spot Bitcoin ETFs were approved on January 10. This is an unprecedented event, considering the number of products launched by issuers and the nascent nature of digital assets.

The appellate court supported the company's viewpoint, stating that the regulatory agency acted "arbitrarily and capriciously" when it rejected the company's application to convert its Bitcoin trust fund into a spot ETF. The regulatory agency had approved a Bitcoin futures ETF in 2021, but the court questioned the assertion that there is a fundamental difference between spot ETFs and futures ETFs, with the latter being riskier.

This victory is seen as an important watershed for the cryptocurrency industry and a signal for other issuers to launch Bitcoin spot products. Subsequently, regulators began to engage with several issuers on how to provide Bitcoin within the traditional ETF packaging.

Another reason to believe that regulators will have a positive attitude towards the Ethereum spot ETF this year is the growing demand from Wall Street giants. Several companies have already applied to launch an Ethereum spot ETF, managing a total of $13.5 trillion in assets.

Industry insiders point out that Ethereum is a product different from Bitcoin, with its own uniqueness. Many companies that build applications on the Ethereum blockchain have seen the long-term value of commercializing it.

As of last Thursday morning, the price of Ethereum was $2837 per coin, while the price of Bitcoin was $52301. Together, they account for over 50% of the nearly $2 trillion global cryptocurrency market.

Experts also pointed out that the existence of the Ethereum futures market is another reason why regulators find it difficult to reject a spot Ethereum ETF. The futures market provides oversight tools to prevent manipulation in the spot market, which was a key factor in the approval of the spot Bitcoin ETF.

However, some believe that it is ambitious for regulators to approve an Ethereum spot ETF in 2024. Some argue that the regulators' ambiguous stance on whether Ethereum is a security is a dangerous signal. The Ethereum public chain's upgrade to the PoS mechanism in 2022 has further sparked speculation about its regulatory status.

Some analysts believe that regulators will eventually approve an Ethereum spot ETF, but it may have to wait until after the November elections. Political factors could influence the decision-making process, especially considering that some political figures oppose cryptocurrencies.

Regulators have not commented on this, but stated that the public can check for any updated documents on their official website.