SEC ‘Indirectly’ Nods ETH as Commodity: Analyst Says Ether ETF May Be Coming

When the United States Securities and Exchange Commission approved ETH futures exchange-traded funds (ETFs) last year, it implicitly accepted Ether (ETH) as a commodity – which means that a spot ETF variant could be developed this year – according to Bloomberg ETF analyst James Seifert.

Speaking during CryptoQuant's private webinar on January 4, Seyfert mentioned that the October 2023 Ether futures ETF approval, the SEC has not challenged the coin's classification through the ETF registration process with the Commodity Futures Trading Commission (CFTC).

“The CFTC is calling Ethereum a commodity. They don't call them securities. […] SEC Approves Ethereum Futures ETFs So again, Gary Gensler does not explicitly state that Ethereum is a security or a commodity, but by their actions, by approving those Ethereum futures ETFs, they are implicitly accepting those Ethereum futures as commodity futures.

Seifert said the SEC has no bandwidth to challenge the classification.

In the US, the first Ether futures ETFs were listed for trading on October 2, several investment firms launched a total of nine funds on the Chicago Board Options Exchange, including ProShares, VanEck, Bitwise, Valkyrie, Kelly and Volshares. According to Seifert, the SEC could find itself in court and have to list futures ETFs if it treats Ether as a security.

The classification is important because securities and commodity ETFs have different taxes and regulatory burdens due to different legal requirements associated with securities.

Here we go…expect more #ehereum ETFs documentation in the coming days.

Note: This is an S-1, not a 19b-4. Which means it won't start a clock anyway…yet. Expect 19b-4 soon. https://t.co/sNus2vr5qV

— James Seyff (@JSeyff) September 6, 2023

“The SEC will not be the only one against the crypto industry. If they call Ethereum a security, it will go against their sister regulator, the CFTC. […] “I think this is why we can see potential Ethereum ETFs approved this year,” the analyst said.

The SEC recently lost a court case over a similar dispute, arguing that the spikes index — an index of stock volatility — is independent of the definition of security futures, introducing competition among such indexes. “There's a precedent here for saying how these things are recorded is important,” Seifert said.

The SEC has a final decision deadline for VanEck, ARK 21Shares and Hashdex's spot Ether ETF in May 2024, with other decision deadlines coming in the months ahead.

But before that, the regulator must announce its ruling on Bitcoin (BTC) ETFs. Seyfart will pour $10 billion into Bitcoin ETFs in 12 months. He predicts approval on January 10.

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