- Recent shifts in SEC’s stance on ether ETFs may reflect political influences ahead of upcoming elections.
- Internal misalignment reported between SEC’s divisions handling different aspects of ETF approvals, suggesting rushed decision-making.
The SEC is nearing a decision on the approval of spot ether exchange-traded funds (ETFs). Recent communications indicate that the SEC’s Division of Trading and Markets has informed exchanges of its intention to approve the necessary 19b-4 filings this week. This marks a significant change from its previous position two weeks ago, where it displayed no interest in these filings.
Reports suggest a political influence behind the SEC’s sudden shift, especially as former President Donald Trump has recently promoted cryptocurrency, implying its strategic importance for winning young voters. This context aligns with the upcoming elections, where cryptocurrency support might be leveraged to attract younger demographic groups.
“If the SEC wanted to draw a line in the sand on ether – whether because they believed it was security, they had concerns regarding the correlation between the spot and futures markets, or some other reason – their chance to do so was last October prior to approving ether futures ETFs,” said Nathan Geraci, president of The ETF Store, said in an email to The Block. “They didn’t do that.”
Internally, there seems to be a lack of coordination within the SEC. The Division of Corporation Finance, which handles S-1 filings, reportedly was not aligned with the Division of Trading and Markets in their recent actions concerning spot ether ETFs. This disconnection within the agency hints that the decision-making process might be influenced by external political pressures rather than purely regulatory considerations.
Despite these complexities, industry experts have anticipated the approval of spot ether ETFs following the SEC’s approval of ether futures ETFs in October 2023. Nathan Geraci, President of The ETF Store, suggests that the SEC’s previous approvals might have set a precedent, facilitating the current developments with spot ether ETFs.
“Once the SEC approved ether futures ETFs, that likely sealed the fate of an approval outcome for spot ether ETFs,” Geraci said. “I strongly suspect the SEC learned an important lesson from the circus atmosphere surrounding the spot bitcoin ETF approval process and decided to approach spot ether ETFs much more quietly.”
He views the SEC’s approach as a strategic, less publicized effort compared to the previous public debates over spot bitcoin ETFs.
As the SEC moves towards finalizing its stance on spot ether ETFs, it faces a tight deadline to update and finalize the 19b-4 forms. The agency is expected to make minimal comments due to the tight schedule, which has been compared to completing a task at the last possible moment.
The SEC’s pending approval of spot ether ETFs is a complex process influenced by internal coordination challenges and potential political motivations. The outcome will likely impact the cryptocurrency market and reflect broader political strategies as elections approach.
