The future of a spot exchange-traded fund (ETF) based on Ethereum’s underlying asset, ether, has stirred significant debate among financial experts and regulators alike. In a recent discussion hosted by Roundtable anchor Rob Nelson, industry experts deliberated the possibilities and challenges facing the approval of such a product in the U.S., diving into topics ranging from regulatory hurdles to the intrinsic nature of ethereum as an asset.
Nelson kicked off the discussion by questioning the likelihood of a spot ether ETF being approved in the near future. Nelson expressed skepticism, shifting from a hopeful spring approval to a more uncertain timeline.
“Ethereum ETF, does it happen? And when?” he asked, setting the stage for a deep dive into the complexities surrounding ethereum and its classification by regulatory bodies.
John Divine, the head of OTC Trading at BlockFills, emphasized Ethereum’s decentralized nature, suggesting the asset qualifies as a commodity rather than a security.
“There is no core team that you can point to that is making improvements on the chain that are trying to drive value for holders of the asset,” Divine noted, presenting a foundational argument for why ether could be seen differently by regulators compared to other cryptocurrencies.
Despite Ethereum’s decentralized status, Divine highlighted the challenges posed by the current regulatory environment under the U.S. Securities and Exchange Commission (SEC). He suggested that a “regime change” might be necessary to expedite the approval process of a spot ethereum ETF.
The recent approval of a spot ether ETF in Hong Kong was seen as a positive step, albeit not directly influential on U.S. regulatory decisions.
Nelson then turned to “Logical Thesis,” a contributor at Wolf Financial, who initially expressed pessimism about the approval prospects but noted recent shifts in the regulatory landscape.
“If you asked me this question last year, I would’ve said probably never,” said Logical Thesis.
Observations of the SEC’s weakening stance in certain legal battles have hinted at possible changes that could favor the approval of a spot ether ETF.
The conversation also delved into the broader cryptocurrency market’s nuances as they relate to Ethereum. Logical Thesis highlighted the difficulty in lumping Ethereum with other alternative cryptocurrencies that may appear more centralized and thus closer to being classified as securities.
Erik Muro, founder of Bitcoin Consulting, offered a timeline of “potentially 2025 and beyond” for spot ether ETF approval. Muro argued that Ethereum’s current level of decentralization might not suffice to exempt it from security status under the Howey test, which could delay its inclusion in the ETF market until further regulatory or conceptual changes occur.
Watch the full discussion here.
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