Bloomberg ETF analyst James Seyffart believes that the SEC has quietly recognized Ethereum (ETH) as a commodity, placing it in the same regulatory category as Bitcoin (BTC).
Seyffart argues that this places ETH in a strong position to be approved for a spot ETF, following a slew of Bitcoin (BTC) based equivalents that are likely to be greenlighted next week.
An Ethereum (ETH) spot ETF is due to reach the U.S. market after a slew of Bitcoin (BTC) based equivalents are likely greenlighted next week, according to Bloomberg ETF analyst James Seyffart.
“The SEC has approved Ethereum futures ETFs,” noted Seyffart, referring to the mass approval of funds from VanEck, ProShares, Bitwise, and Valkyrie in August.
Sponsors were inspired to apply at the time after witnessing the SEC approve the first leveraged Bitcoin futures ETF in June. This could be the beginning of a new era for the cryptocurrency market, as the SEC has been hesitant to approve ETFs in the past.
This news signaled to the market that regulators might now be willing to list crypto products with a higher risk profile, like Ethereum futures.
This development could mean that regulators are now more open to listing products that carry a higher risk, such as Ethereum futures.
The SEC, however, has not made a final determination on this issue.
The different regulatory requirements for commodities and securities can be seen in the way that each are taxed. For commodities, any gain or loss is treated as 60% long-term and 40% short-term, regardless of how long the asset is held.
For securities, the gain or loss is generally treated as long-term if the asset is held for more than one year, and as short-term if it is held for one year or less.
The reporting requirements for commodities and securities also differ. Commodities must be reported to the CFTC, while securities must be reported to the SEC.
The distinction between commodities and securities is important for a variety of reasons, including the regulatory, tax, and reporting requirements that are attached to each.
Gary Gensler, the chairman of the SEC, has long been tight-lipped about the classification of ETH. He has dodged interviewers when they have probed him about the matter.
However, the agency did not mention ETH in its lawsuits against Binance and Coinbase last year. The lawsuits named dozens of other top cryptos, including Solana (SOL), Cardano (ADA), and Polygon (MATIC), as securities.
Likelihood Of ETF Approval
The SEC has been mum on whether it will approve or deny Bitcoin ETF applications from BlackRock, Fidelity, Grayscale, and others, only noting that it’s making a “fresh evaluation” of such proposals after losing its court case with Grayscale in August.
This has left the crypto community on edge, with many wondering whether the SEC will finally give the green light to a Bitcoin ETF or whether it will continue to delay its decision.
Seyffart believes that there is a 90% chance that the SEC will approve the ETFs next week. The SEC has been engaging with the applicants more recently and the discussion has been positive.
While Ethereum ETFs may not be a sure thing, the SEC will have a hard time denying them.