(Kitco News) – Cryptocurrency prices have surged in the past 24 hours amid an about-face by the U.S. Securities and Exchange Commission (SEC), which is now reportedly considering approving Ethereum in multiple cash (ETH) exchange-traded funds (ETFs) after months of doubts and delays.
Over the past few months, analysts have reached consensus that approval of a spot Ether ETF was unlikely, as the SEC has shown little engagement with applicants, while SEC officials have repeatedly stated that they view Ether as a security.
But with the US election season underway and crypto becoming a trending topic – with Donald Trump warning Democrats would do so. attacking the industry when he would welcome it with open arms – the SEC appears to be re-evaluating its approach and is now scrambling to get approval for ETFs.
On Monday, CoinDesk reported that the SEC had asked Ether ETF applicants to update their 19b-4 filings by an important deadline this week, which was the signal needed to show that the regulator was now serious about evaluation of applications.
After the story broke, Bloomberg ETF analysts Eric Balchunas and James Seyffart update their chances of approval 25% to 75%, with Balchunas saying the move came after “hearing talk this afternoon that the SEC might do a 180 on this (increasingly political issue), so now everyone is scrambling (like us, everyone thought they would). be refused).”
Amid misgivings from some over the drastic increase in chances of approval, analyst Nic Carter came to Balchunas and Seyffart's defense: Tweeter“How was anyone supposed to predict that Trump would endorse crypto and the Democrats would throw a Hail Mary and pivot? It wasn't predictable.
Since reports of this turnaround emerged, several asset managers have updated their documents to remove any language related to Ether staking, which was the main issue in the debate over whether the Ether is a security and a commodity.
Fidelity was one of the first to adjust its request by filing an S-1 request. update early Tuesday, showing that they have canceled plans to stake ether holdings in their proposed spot ETF. In previous filings, the company said it intended to “put into play a portion of the trust's assets” with “one or more” infrastructure providers, but in the update, the company clearly states that it would “not involve ether” stored with the custodian. .
Alex Thorn, Head of Research at Galaxy Digital Research, said the SEC is trying to “connect the dots between “ETH” which is NOT a security and “staked ETH” (or, even more fragile, “staking as an ETH service”) as BEING a security.
“This would be somewhat consistent with their various court cases, as well as reports on their various investigations, and perhaps allow the SEC to approve Ethereum ETFs while maintaining their previously expressed/argued opinions,” he said. -he adds. “In this case and perhaps for other reasons, one would expect the SEC to prohibit ETFs from betting on the ETH they hold.”
There are now nine Ether ETF applications pending with the SEC, with filings from VanEck and ARK due for final review on May 23 and 24 respectively.
Here is a list of all the participants on site #Ethereum ETF race. The “issues of ETHness”
(go to @LongTailFinance for the name) pic.twitter.com/ZBQVJ6ppKp
–James Seyffart (@JSeyff) May 20, 2024
According to Joseph Edwards, head of research at Enigma Securities, the SEC's decision to take a tough stance against Ether ETFs after approving the Bitcoin spot (BTC) ETFs seemed out of step with the way things are normally done.
“Opposing the ETH ETF after the approval of the BTC ETF always seemed like an odd case for the SEC, unless it was prepared to open questions more broadly about the status of Ethereum securities , and it's likely that the call came from somewhere not to accept this fight,” Edwards. said Reuters.
Geoff Kendrick, head of FX and digital assets research at Standard Chartered, told Forbes India that they are “80% to 90%” certain that the SEC will approve Ether spot ETFs later this week. He added that the bank expects first-year inflows into Ether spot ETFs to be between 2.39 million and 9.15 million Ether, or approximately $15 billion to $45 billion.
They also believe that any bad news is already priced into Bitcoin and Ether prices and that “positive structural factors” are likely to take over, prompting Kendrick to reiterate the bank's price targets for the end of the year, or $150,000 for Bitcoin and $8,000 for Bitcoin. Ether.
But according to in Seyffart, while the approval of 19-4b requests could take place on May 23: “We also need S-1 approvals. It could take weeks, if not months, before we see S-1 approvals and therefore a live ETH ETF. That said, if we're right and we see these theoretical approvals later this week. This *should* mean that S-1 approvals are a matter of “when,” not “if.”
The sudden rise in approval chances gave a dose of adrenaline to the price of Ether, which rose from $3,115 on Monday to a high of $3,837 in early trading on Tuesday, an increase of 23.1 %.
ETH/USD Chart by TradingView
At the time of writing, Ether is trading at $3,785, an increase of 22.2% on the 24-hour chart, while Bitcoin is trading at $70,215, an increase of 4%. .95%.
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