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Is SEC Shutting Down Ethereum ETF?

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36Crypto
Monks

Diving into the correlation between the Ethereum ETF filing and its Foundation investigation. Reports from March 20 indicate that the Ethereum Foundation – the Swiss non-profit organization at the heart of the Ethereum ecosystem – is the subject of investigations by an unnamed “state authority”, according to the the group’s website GitHub repository.

The full scope of the investigation remains unknown at the time of reporting. According to the GitHub commit dated February 26, 2024“we received a voluntary investigation from a state authority that included a confidentiality requirement.”

The vagueness has sparked theories about the event, with the most widely adopted being the SEC’s involvement in the investigation into Ethereum as part of a possible pre-inspection of the Ether ETF. The presumption was first mentioned by Fortuneexplaining that the Securities and Exchange Commission is seeking to classify ETH as a security.

The Fortune report also clarifies that the SEC has sent investigative subpoenas to U.S. companies in recent weeks.

The financial regulator’s rumored action was seen as the result of major implications for Ethereum, an Ether ETF and crypto as a whole. The positive potential of this event could extend to Whitechain, Polygon and other networks, with financial institutions eventually adopting them.

A lawyer familiar with the situation said CoinDesk that a Swiss regulator could have served document requests on the Ethereum Foundation and several other companies in cooperation with the United States Securities and Exchange Commission (SEC). The initial reasons for this decision remain unclear, while the news speaks to deep pessimism about the potential approval of the ETH ETF.

James Seyfartt, research analyst at Bloomberg Intelligence, note that his “cautiously optimistic attitude toward ETH ETFs has changed in recent months,” alluding to the Ethereum Foundation investigation.

Notably, he did not dismiss the possibility of an ETH ETF approval, assuming it will happen this fall.

The dominant explanation for the Ethereum Foundation investigation remains the deliberate shutdown of the Ether ETF initiated by the SEC.

This idea was voiced by Travis Kling — Chief Investment Officer (CIO) at Ikigai Asset Management. In his post for X, he claims this is a “coordinated attack on ETH”:

“It’s interesting in light of Larry’s (Larry Fink, CEO of BlackRock) 576-1 record and the simple fact that he is unequivocally more powerful than Gary (Gensler, SEC Chairman),” added Kling.

The uncertain status of the Ether ETF has already been highlighted by Morgan Creek SEO. Marc Yusko and JP Morgan analyst Nikolaos Panigirtzoglou. Both stressed the importance of defining Ether as a security to move forward in approving exchange-traded funds.

On the other hand, many have seen Ripple partial legal victory regarding XRP status and establishment of many crypto tokens as commodities by CFTC Chairman Ron Behnam as positive developments towards Ether ETF.

In January, Fox Business reporter Eleanor Terrett Express inclination towards the certainty of the approval of the ETH ETF, addressing the dispute with Binance. Hopes were expressed in one of the sessions hinting at the recognition of DAO tokens as securities.

Now the journalist believes the Ethereum Foundation asks why the “SEC has been so quiet with ETH spot ETF issuers.”

“SEC staff may be waiting for ongoing investigations to conclude before Gary Gensler instructs them,” she said. declared in the post for X.

Scott Jonsson quoted a “political factor” as one of the motives for the “attack”. According to the lawyer, the SEC could use the Ethereum Foundation investigation to appease crypto skeptics who have demanded a tougher stance from the agency.

According to Cointelegraph reportEarlier this month, Senators Jack Reed and Laphonza Butler urged Gary Gensler to suspend any new seats Crypto ETF Approvals. Senator Elizabeth Warren has also been very vocal about her disapproval of investment products.

Scott Johnson too presumed that the SEC may need a non-correlation objection to deny spot Ether ETFs with the help of the Ethereum Foundation investigation. He explains that this may be a temporary solution, as correlation levels improve over time.

Finally, Johnsson considers that the SEC’s action kills two birds with one stone: refusing spot Ether ETFs while avoiding “undermining the arguments” of the market. body’s lawsuit against Coinbase and Binance.

“…since the (Ether ETF) approval would be the clearest/explicit endorsement of ETH’s non-security status to date, it risked undermining CB/Binance and the entire SEC cryptographic theory broadly/permanently”, wrote Johnsson at his post for X.

In his latest interview with Bloomberg TV earlier this month, Gensler was asked about the status of ETH as a security, to which he responded rather obscurely.

“We have files in front of us. I’m not going to comment. (…) We find herein motivation for the SEC to further investigate the security status of ETH as an additional pretext to withhold approval. Gensler specifically stated.

The Ether ETF roadmap has not yet seen any significant developments. “Any rumors regarding activity” that the SEC and its foreign counterparts engage in may be correlated with the May 23 deadline that the SEC faces,” goes in a related attorney statement relayed by Coin Office.

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