ACCORDING to Bloomberg, in a key development for the cryptocurrency industry, the US Securities and Exchange Commission (SEC) is reportedly set to allow the launch of exchange-traded funds (ETFs) based on Ethereum (ETH) futures.
This move marks a significant victory for many companies that have long sought to introduce such products. While the SEC has previously been hesitant to approve ETFs directly tied to cryptocurrencies, the decision to greenlight an Ethereum futures ETF could have profound implications for Ethereum’s classification as a non-security. .
This development also has potential consequences for other cryptocurrencies, as the SEC’s stance on where the line between security and non-security has become the subject of litigation.
Ethereum’s Paradigm Shift
According to a Bloomberg report, sources familiar with the matter claim that the SEC is unlikely to block ETFs based on futures contracts for Ethereum, which is currently the second largest cryptocurrency by market capitalization.
Nearly a dozen companies, including prominent names like Volatility Shares, Bitwise, Roundhill, and ProShares, have filed applications to launch these ETFs. While it remains unclear which funds will receive approval, insiders suggest that many could be given the green light as early as October.
This anticipated approval of an Ethereum futures ETF by the SEC could have major implications for the regulatory treatment of cryptocurrencies.
The SEC’s reluctance to approve ETFs directly tied to cryptocurrencies has prompted speculation that derivatives-based products will provide a potential avenue of market access.
On this matter, crypto analyst Adam Cochran has highlighted that the SEC may approve an ETF based on Ethereum futures contracts fully acknowledges that Ethereum itself is not considered a security.
This decision challenges the idea that Ethereum should be regulated as a traditional financial security, considering its mechanism, purpose, and use of proof-of-stake.
Cochran further believes that the SEC’s approval of an Ethereum futures ETF reinforces Ethereum’s unsecured status and sets a precedent that could affect other cryptocurrencies facing regulatory scrutiny.
The ongoing legal battle between the SEC and Grayscale Investments over the rejection of their Bitcoin trust into an ETF highlights the agency’s concerns about investor protection, manipulation risks, and price volatility.
However, this agreement may provide a compelling argument in favor of distinguishing between the underlying asset and how it is sold, which reinforces the Torres Doctrine and may influence the outcome of the same cases. case, like the XRP appeal.
The SEC’s approval of an Ethereum futures ETF is of great importance for the cryptocurrency industry. If confirmed, this would mark a significant moment for the classification of Ethereum as a non-security, further strengthening its position as a commodity or currency.
The decision also highlights the regulatory challenge of defining clear boundaries between securities and non-securities in crypto.
As the industry evolves, the approval of an Ethereum futures ETF could shape the regulatory landscape, paving the way for more adoption and investment opportunities in the cryptocurrency market.
However, the news is not entirely favorable for ETH as it is trading at $1,660, following a downward trend like Bitcoin and the overall cryptocurrency market. The market experienced a considerable outflow of liquidity, which led to a significant decline in most digital currencies.
Over the past 24 hours, ETH has dropped more than 4% after breaking its established range between $1,895 and $1,830. In addition, it suffered a remarkable loss of 10% within a seven-day timeframe.
Featured image from iStock, chart from TradingView.com