Spot Bitcoin approved, Spot Ether ETF next?

Just last month, the approval of spot Bitcoin ETFs for trading sparked enthusiasm throughout the cryptocurrency industry. While this development is a significant driver for the real-world adoption of Bitcoin, there’s lingering curiosity among crypto enthusiasts about the possibility of a similar approval for Ethereum and its native token, Ether.

The anticipation is more than mere speculation, as several entities have submitted applications for a spot Ether ETFs. Let’s take a look at the current situation, possible outcomes, and what this may mean for the crypto industry at large.

Is Ether a commodity or a security?

The Commodity Futures Trading Commission has revealed that it acknowledges Ether as a commodity, not a security. However, the SEC has yet to explicitly agree with this view, as no clear answer has been openly expressed by the body. 

Patrick McHenry, U.S. Rep., questioned. SEC Chair Gary Gensler sometime last year if Ether was believed to be security or a commodity, but no clear answer was provided by Gensler. 

Will Spot Ether ETF ever get approval?

Why is the APY so high in cryptocurrency Vs. traditional investments

Following the approval of spot Bitcoin ETFs, many crypto enthusiasts expect the approval of a spot Ethereum ETF. There is a good chance that this will happen as the Securities and Exchange Commission (SEC) will make a final decision concerning this issue by May. May 23 has been set as the provisional day for the approval after the filing by Blackrock.

The value of Ethereum has also been increasing over the past few years along with Bitcoin, as well as enthusiasm for greater crypto adoption. These are generally good signs for both digital coins.

Since investors bought Bitcoin last year in anticipation of the approval of the spot Bitcoin ETF, the same thing may be happening with Ethereum, since its value has been increasing in recent weeks. 

Why Spot Ether ETF approval may not come until much later

Although crypto enthusiasts are excited that a spot Ethereum ETF may be approved in May, some experts are still more skeptical that it will happen.  

The justification for this is that the investment bank thinks that “the SEC will want to gain experience from Bitcoin” before deciding to approve another digital currency, whether it is for Ether or any other token.

Possible challenges for  Spot Ether ETF approval 

What are smart contracts

Even though Ether is similar to Bitcoin, there are still fundamental differences that may pose challenges for the approval of a Spot Ether ETF. Some of these challenges include:

1. Smart Contract Functionality

Ether can be employed for a wider range of functionalities, unlike Bitcoin which was created purely for transactional purposes. The smart contracts functionality of Ether may serve as a regulatory hurdle.

2. Scalability Concerns

Ethereum’s current scalability restrictions may cause concerns about its suitableness for a large-scale, institutional-grade major investment vehicle.

3. Regulatory Uncertainty

Regulations concerning smart contracts and decentralized applications created on Ethereum are still vague in many jurisdictions. This adds another layer of complexity.

Is now a good time to invest in Ethereum?

With the crypto industry optimistic about the approval of a spot Ethereum ETF, now may just be a good time to invest in Ethereum.

However, note that there’s always the risk of volatility when it comes to cryptocurrency investments, but with regulators starting to take a more positive stance on digital currencies and even approving a spot

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Emmanuel Agwu

Feb 7, 2024

3 mins read

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