As the market waited with bated breath for approval for spot ETFs, Bloomsberg analyst James Seyffart discussed the regulatory stance on Ethereum. In a webinar on Jan. 4, he mentions that the Commodity Futures Trading Commission [CFTC] has classified ETH as a commodity rather than a security. The distinction is important in the regulatory landscape because commodities and securities are subject to different sets of rules and oversight.
Seyffart goes on to explain that the Securities and Exchange Commission [SEC], headed by Gary Gensler, has approved Ethereum futures exchange-traded funds [ETFs]. Despite Gensler not explicitly stating whether ETH is considered a security or a commodity, Seyffart argues that by approving futures ETFs, the SEC is implicitly acknowledging Ethereum futures as commodities futures.
In essence, the regulatory bodies are treating the altcoin, or at least its futures contracts, as commodities rather than securities. This distinction has implications for how these assets are traded, regulated, and overseen by the respective regulatory agencies. The approval of ETH futures ETFs suggests a willingness to allow these financial products to be traded on traditional exchanges, similar to how commodity futures are traded.
Ethereum ETF
The launch of Ethereum ETFs commenced in early October, with ProShares introducing three out of a total of nine new products. ProShares made waves in the cryptocurrency investment sphere by unveiling the first-ever ETH inverse ETF. However, the regulatory response has been lukewarm, with the joint ETH Spot ETF application from Invesco and Galaxy facing a delay. The SEC has decided to postpone its decision until February 6, 2024. Subsequently, the SEC extended its decision on various ETH exchange-traded funds until May 2024.
All eyes are now on the pending approval of Bitcoin ETFs, which have the potential to set a precedent for cryptocurrencies not classified as securities, such as Ethereum and Polkadot. If approved, these digital assets would be regarded as akin to shares of a company listed on the stock exchange, marking a significant milestone in legal investment. This development has the potential to attract billions of dollars from both institutional and individual investors, ushering in a new era of legitimacy for the cryptocurrency market.