Overview of the SEC's "messy" decisions surrounding the Ethereum spot ETF

4 months after the SEC officially "turned on the green light" for the Bitcoin spot ETF, on the morning of May 24 (Vietnam time), this "green light" continued to be turned on for the Ethereum spot ETF.

The crypto community joyfully welcomed a second victory, another historic milestone. But this victory was also very surprising.

A long time without hope

Many months ago we identified May 23-24 as a key time for Ether ETF proposals. But unlike the previous Bitcoin pre-ETF situation, we do not see any "signal" from the SEC.

The "G hour" milestone is coming closer and closer to the final bell before an official refusal, rather than a nod of agreement.

First, the SEC has not had constructive dialogue with ETF originators, unlike the period before the Bitcoin spot ETF.

Second is the anti-ETH stance of SEC Chairman Gary Gensler, who has recently targeted many companies in the Ethereum ecosystem such as Uniswap and Consensys, as well as continuously being vague on the question of securities classification for ETH coin.

Mr. Gensler repeatedly expressed the attitude that besides Bitcoin, other currencies are all securities and was "indifferent" to the idea of ​​an Ether ETF. The clear "hostile" attitude of the head of the competent authority shows that there is absolutely no possibility that the SEC will change its mind.

In fact, the previous push for the Bitcoin spot ETF came from Grayscale's complaint to the SEC about its successful Bitcoin ETF proposal, forcing the SEC to look directly at this issue without being able to "ambiguate" anymore.

Therefore, changing this agency's opinion largely comes from legal disputes and debates in court rather than just "friendly dialogue".

The clearest evidence is that Bloomberg's longtime ETF analysts only predict a 25% probability, and many others frankly say that the Ether ETF will not be approved.

Or if Standard Chartered reverses its stance, the deadline will be the official date of refusal.

Reflected in price

Such clear market sentiment is also directly reflected in the price chart.

After peaking in March with the hype surrounding the Bitcoin ETF, the crypto market maintained momentum until mid-April when it began to "collapse".

Of course, it is not only because of the ETF but also many other influencing factors, mostly from the tense world geopolitical situation. All combined into an extremely "uncomfortable" BTC sideway period, strong Altcoin dumps, some coins even divided by 2 or 3.
In the early days of May, ETH even dropped below the "top 3".
These signs all clearly show predictions of a "bleak future", "big money" funds have also begun to "sell the news".

The last days "turned 180 degrees"

Tick ​​off the clock gradually, the deadline is getting closer and closer, two weekends before "sentence week", many communities "call short" BTC around 67,000 USD, ETH barely fluctuates a few dozen price steps.

But "30 is not Tet", 89 minutes can still save the match, the whole Asian market woke up on Tuesday morning, May 21 with an "extremely harsh" turn:



Just during the first working hours of the US market week, the SEC suddenly turned 180 degrees without warning - requiring organizations to submit additional 19b-4 filings - a mandatory "procedure" before approving Browser.

On the same day, the SEC again requested the two stock exchanges Nasdaq and CBOE to quickly update and adjust applications for listing Ethereum spot ETF trading - SEC "reminders" usually only take place before preparing for the exchange. Listing and trading of new assets on the stock exchange.

Two consecutive "signals" in just a few hours turned everything upside down. Bloomberg ETF analysts raised the probability from 25% to 75%. Standard Chartered also had to "reverse" its previous prediction.



All such haste shows that even within the SEC, they could not predict this decision, showing that this is only a temporary preparation. Otherwise, to prepare the ETF in advance as with the previous BTC ETF, the SEC would have requested additional 19b-4 filings months or weeks in advance.

Up to now, the approval is only through the 19b-4 filing, the transaction is only carried out when the S-1 document is approved. We have to wait a few more weeks or months to see the ETH ETF listed.

Meanwhile, by comparison, the SEC had already passed 19b-4 in preparation for S-1 approval at the time of announcing the acceptance of the BTC ETF. Therefore, the market exploded immediately because 11 ETFs were traded "right away" on January 11.

Is ETH a security or not?

As mentioned above, the approval of ETH Ether is like a "slap" to the previous SEC Chairman's statements declaring Ether to be a security.

Of course, any judgment or viewpoint can be changed to suit the actual context. So what should Mr. Gensler say?

Many observers believe that the SEC will declare Ether not a security, but ETH staking activities will be classified as securities.

This is consistent with Mr. Gensler's long-held view that Proof-of-Stake projects have securities characteristics that warrant their inclusion under the SEC's regulatory framework.

The debate about whether ETH is a security or not has also begun to emerge since Ethereum completed The Merge upgrade, moving from PoW to PoS.

Therefore, "flexibly" declaring that Ether is not a security but staking ETH is - is most suitable for the current context and still maintains the stance of this agency.

Why did the SEC "turn around"?

One last question, why did the SEC "turn around at the last minute" like that? The decision was so sudden that there was no adequate response within this agency?

As Coin68 predicted, the story behind the scenes is likely related to political motives. Accordingly, many sources confirm that Joe Biden's Democratic Party can win against Donald Trump - the strong candidate of the Republican Party - through the SEC's approval of the Ethereum spot ETF.

"The problem here is that the Democratic party desperately needs young people to vote. Therefore, President Joe Biden is trying to build his image as an older person with a progressive vision."
In addition, we can mention the role of the cryptocurrency management bill FIT21, which was just passed by the House of Representatives on May 23.

FIT21 aims to give the Commodity Futures Trading Commission (CFTC) more power to oversee the cryptocurrency market, as well as the “digital goods” based regulatory framework for digital assets that the bill establish.

Because FIT21 "supports" the CFTC, the SEC needs to reaffirm its role by pulling the Ether ETF under the agency's management.