Home Editor's Pick SEC Unlikely to Approve Further Crypto ETFs Soon

SEC Unlikely to Approve Further Crypto ETFs Soon


With spot Ethereum exchange-traded funds (ETFs) getting listing approval from the U.S. Securities and Exchange Commission (SEC), all eyes are now on other crypto ETFs. Solana ETFs and Ripple ETFs are the most anticipated. However, in a recent interview, a JP Morgan employee said the SEC will unlikely approve other crypto ETFs soon.

The leading bank doubts whether other crypto funds can follow Ethereum’s steps to be approved in the largest market for ETFs in the world.

According to Nikolaos Panigirtzoglou, managing director at JP Morgan, the approval of spot Ethereum ETFs was already a close call, considering the uncertainty about whether Ethereum itself is a security.

More Crypto ETFs Coming?

Since ETH and Solana share many similarities, many cryptocurrency experts and members are hopeful that Solana could be next to join the ETF list.

However, Panigirtzoglou is skeptical that the SEC will approve ETFs for cryptocurrencies like Solana (SOL) since the agency seems to hold a strong opinion that cryptocurrencies outside of Bitcoin (BTC) and Ethereum are likely securities.

“We don’t think the SEC would go even further by approving Solana or other token ETFs given the SEC has stronger (relative to Ethereum) opinion that tokens outside bitcoin and Ethereum should be classified as securities,” the analyst told The Block.

On May 23, the SEC greenlit 19b-4 forms associated with eight spot Ethereum funds from Grayscale, Bitwise, BlackRock, VanEck, Ark 21Shares, Invesco, Fidelity, and Franklin. These products are pending S-1 form approval to fully operate.

More ETFs Will Be Approved

The reason for Ethereum ETF’s approval remains controversial but many guess that it was likely because ETF issuers removed staking references from their filings. Others suspect that political pressure from the Biden administration also played a major role.

Compared to Ethereum, ETFs tied to Solana might not see a favorable outcome as the SEC might want to define Solana as securities. The ambiguity of regulations in the definition can turn the case with Solana upside down at any moment.

SEC Chair Gary Gensler has consistently maintained that most cryptocurrencies, except Bitcoin, are deemed securities and must comply with relevant securities laws. Experts believe that with the recent approval, the SEC has indirectly confirmed that Ethereum (ETH) is not a security.

As previously reported, the SEC had launched a campaign to classify ETH as a security. The Ethereum Foundation is also under investigation by a state authority. However, as of May 28, there had been no further update on this case.

In addition, the SEC sent a Wells Notice to Consensys, threatening enforcement action against the entity. Apart from potential allegations that Consensys violates federal securities laws, the reason could be linked to the SEC’s stance on Ethereum.

The SEC Has No Choice

Fox Business reported that in looking up Ethereum’s legal status, the SEC sent multiple subpoenas to companies associated with Ethereum, including Consensys.

Those cases strengthened the belief that the SEC would soon label ETH as a security and thus reject spot Ethereum ETFs. The recent approval was a surprising move from the agency.

Though JP Morgan remains cautious about the SEC greenlighting additional cryptocurrency ETFs, other industry experts hold a more optimistic view. They believe that the recent approval of spot Ethereum ETFs signals the potential for a broader range of crypto ETFs linked to various cryptocurrencies and tokens.

Standard Chartered analyst Geoffrey Kendrick predicts that with the recent spot Ethereum fund approval, Solana ETFs and other crypto ETFs could see the greenlight by 2025.

Similarly, Jaret Seiberg of TD Cowen suggests that the market could witness an expansion in crypto ETF offerings, including a diverse range of tokens bundled into an ETF, within the next year. If greenlit, these ETFs could ignite major market expansion, attracting new investors and bolstering cryptocurrency adoption.

According to Michael Saylor, the SEC’s approval of spot Ethereum ETFs could also benefit Bitcoin and the whole cryptocurrency ecosystem. Political support for cryptocurrencies will also open the door to more institutional adoption.

Previously, Saylor expressed skepticism that the SEC would approve spot Ethereum ETFs, citing that Ethereum, as well as other altcoins, would be deemed securities.

The post SEC Unlikely to Approve Further Crypto ETFs Soon appeared first on Blockonomi.

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