According to SEC Chair Gary Gensler, the launch of U.S. spot Ether exchange-traded funds (ETFs) currently depends on how promptly the issuers address feedback from the Securities and Exchange Commission (SEC). In a recent statement, he mentioned that the SEC will not intentionally prolong this approval process.
There has been considerable progress, with the commission approving eight 19b-4 filings to list spot Ether ETFs. However, the commencement of trading now awaits the necessary approvals of S-1 registration forms. Gensler’s comments highlight that the speed at which these approvals will be given largely depends on how fast the issuers address the SEC’s comments, whose decisions are influenced by certain factors.
The Impact of Grayscale’s Legal Challenge
An important factor influencing the SEC’s stance on Ethereum ETFs is the precedent set by Grayscale’s legal challenge regarding Bitcoin ETFs. Grayscale argued that if Bitcoin futures ETFs receive SEC approval, Bitcoin ETFs should not be denied either. This legal victory led to a similar approach being applied to Ethereum ETFs. Gensler pointed out the comparable correlations between BTC and ETH, indicating a gradually shifting regulatory environment transitioning into a more inclusive perspective on crypto ETFs.
Speculations on Political Influence
Although regulatory decisions mostly depend on legal and market factors, some believe political influences also play a role. Bloomberg ETF analyst James Seyffart proposed that SEC Commissioner Jaime Lizárraga might have been influenced by his connections with prominent Democrat Nancy Pelosi. Pelosi supports the Financial Innovation and Technology for the 21st Century Act, which aims to foster crypto innovation. This backing could reflect a broader political strategy to align with the growing crypto-friendly sentiment among voters ahead of the U.S. general elections.
Broader Regulatory Concerns in Crypto
Apart from the specifics of Ethereum ETFs, Gensler has also expressed broader concerns about the crypto market. In a June 5 interview, he criticized the unethical practices ongoing in crypto exchange platforms, such as trading against customers—a practice firmly prohibited in traditional financial markets like the NYSE.
Gensler mentioned the SEC’s ongoing efforts to enforce regulations and strengthen market integrity. He also indicated that significant gaps in regulation, particularly in terms of disclosure standards, make investors more vulnerable. Therefore, this critique underscores the need for a robust regulatory framework to protect investors and ensure fair practices in the rapidly evolving crypto sphere.
