Spot Ethereum ETF Takes Center Stage In U.S. Politics, Here’s How

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As a seasoned crypto investor with a keen interest in regulatory developments, I’m closely monitoring the ongoing situation with the Ethereum (ETH) spot ETF approval process. The recent price surge of over 30% in just two days is a clear sign of market enthusiasm. However, the sudden shift by the US Securities and Exchange Commission (SEC) to engage with issuers on the spot ETH ETF has left many of us questioning the motivations behind this move.

Recently, there’s been a significant surge in Ethereum (ETH) and cryptocurrency markets, with Ethereum reaching an all-time high above $3,800 – a 30% increase in just two days. This optimistic trend is largely driven by anticipation that the US Securities and Exchange Commission (SEC) will approve the long-awaited spot Ethereum Exchange Traded Fund (ETF) this week.

Spot Ethereum ETF at the Center of U.S. Politics

Prior to last week, the US Securities and Exchange Commission (SEC) had refused to entertain discussions regarding a spot Ethereum Exchange Traded Fund (ETF) with the prospective issuers. However, in a surprising about-face, the SEC has initiated talks on this matter during the current week.

Sarah Wynn from The Block remarked, “This situation is uniquely without precedent and thus purely political in nature. They haven’t even managed to align internally yet, making it highly probable that this is a politically motivated choice.”

As other reports have noted, the upcoming U.S. Presidential elections later this year might be a factor in these actions, given President Biden’s history of taking a firm stance against cryptocurrencies.

From my perspective as an analyst, while former President Trump has taken a pro-crypto stance and accepts digital currency donations, the Democratic Party faces a significant challenge in attracting young voters to their cause. According to my source, Biden’s campaign strategy revolves around projecting himself as a forward-thinking octogenarian. However, if the Securities and Exchange Commission (SEC) were to approve spot Ethereum ETFs, it could potentially give President Biden an edge in gaining support from this demographic.

EVERYTHING HAS CHANGED.
Democrats pushed back against Biden and Warren and voted for crypto.
As a crypto investor, I’ve been following the developments at the FDIC closely, and I was particularly intrigued by the role of its chair, whom Warren Buffet was reportedly supporting behind the scenes. Now, it seems that this individual is stepping down from their position. The implications of this departure for Chokepoint 2.0 and the regulatory landscape of digital assets remain to be seen.
The ETH ETFs are likely to be approved now as a result of the tide change.…
— The Wolf Of All Streets (@scottmelker) May 21, 2024

Expert’s Take on the Matter

Among cryptocurrency industry insiders, there’s a consensus that the SEC’s recent about-face isn’t solely driven by politics. Nate Geraci, President of ETF Store, asserts that the SEC had been readying for the go-ahead on a spot Ethereum ETF. The regulatory body greenlit Ether futures ETFs from ProShares, VanEck, and Bitwise in October 2021, paving the way for spot-based products.

My theory on SEC waiting until last minute to engage w/ exchanges & issuers on spot eth ETFs…

I think politics played a very minor role here, if any.

via @ForTheWynn_

— Nate Geraci (@NateGeraci) May 21, 2024

After the SEC gave the green light to ether futures ETFs, it became highly probable that they would also approve a spot ether ETF. According to Geraci.

Some Bitcoin enthusiasts, labeled as “maximalists,” have expressed strong disappointment and concern towards the Securities and Exchange Commission (SEC) regarding the potential approval of a spot Ethereum Exchange Traded Fund (ETF). The Bitcoin Therapist, an influential Twitter account, commented on this issue.

If the Securities and Exchange Commission (SEC) endorses an Ethereum exchange-traded fund (ETF), it could be perceived as a sign that the market isn’t effectively regulated by skilled players. Ethereum functions more as a speculative playground for wagering on decentralized “altcoins,” which can be highly unpredictable and risky. This approval could potentially lead to an altcoin gambling establishment within the SEC itself.

According to Paul Grewal, the Chief Legal Officer at Coinbase, the proposed legislation contradicts the Securities and Exchange Commission’s (SEC) latest stance that most cryptocurrencies, other than Bitcoin, fall under the Howey Test’s definition as investment contracts or securities.

Grewal stressed that this legislation doesn’t eliminate the industry, but instead aims to correct what he views as an outdated regulatory approach.

The exact date for the approval of Ether ETFs in the form of spot products is uncertain. Nevertheless, recent progress indicates a potential launch by late July or early August.

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2024-05-22 08:00