Ether Commodity Status Affirmed by ETF Approval: Industry Experts Weigh In

Ether Commodity Status Affirmed by ETF Approval: Industry Experts Weigh In

Following the approval of spot Ether exchange-traded funds (ETFs), industry experts gathered to discuss the implications during a Cointelegraph-hosted session on X Spaces. On May 23, the United States Securities and Exchange Commission (SEC) approved the 19b-4 filings from several Ether ETF applicants, including VanEck, BlackRock, Fidelity, Grayscale, Franklin Templeton, ARK 21Shares, Invesco Galaxy, and Bitwise.

Consensys’ Director of Global Regulatory Matters, Bill Hughes, interpreted the SEC’s approval as an implicit admission that Ether is a commodity.

Cointelegraph Managing Editor Gareth Jenkinson moderated the X space discussion, featuring insights from Bloomberg analyst Eric Balchunas, VanEck’s head of digital assets research Matthew Sigel, Consensys’ Bill Hughes, and Animoca Brands co-founder Yat Siu.

Post-Approval Landscape for Ether ETFs

Balchunas anticipates a scenario akin to the launch of spot Bitcoin ETFs, predicting a “carbon copy horse race” where the same issuers debut simultaneously. However, he expects the Ether ETFs to have lower trading volumes compared to their Bitcoin counterparts.

“I would look for a lot of similarities, except I would divide everything you saw with Bitcoin by about 10. So, you’re going to have like maybe $1 billion or 2 in the first couple of weeks total. I just don’t see these as big,” Balchunas stated. Despite the lower volume projections, he noted that traders might engage in unique strategies, such as shorting the ETF while buying Ether to take advantage of staking opportunities.

Matthew Sigel of VanEck highlighted that their team has been diligently working to present a compelling investment case for Ethereum. He emphasized the growing interest among tech and equity investors in assets with intrinsic value, many of whom may be unaware of Ethereum’s dynamic decentralized application (DApp) ecosystem.

Global Competition in Crypto ETFs

Yat Siu, who collaborates with the Hong Kong government on Web3 development, foresees increased competition as the U.S. and Hong Kong have both approved spot BTC and ETH ETFs. Siu believes this could prompt other jurisdictions, such as the U.K., Singapore, Japan, and Dubai, to consider their own crypto-based ETFs. “Now that the U.S. has approved it, I think other countries around the world…they’re all going to be looking at, ‘well, we need to have our own version of this spot ETF,’” Siu explained.

Siu asserted that the U.S. would strive to maintain its competitive edge, suggesting that there will be more significant developments as sentiments shift within the country.

Legal Perspectives on Ether’s Commodity Status

Bill Hughes pointed out that while the SEC did not explicitly classify Ether as a commodity, the approval of spot ETFs suggests an implicit recognition of this status. He called for greater transparency from the SEC regarding the broader implications of its rulemaking.

“These rule amendments, which is, from our vantage point, is troubling. We should be above board and transparent as to the implications that something like this has in more than just the rule makings themselves,” Hughes stated. Despite the positive reception of the ETF approvals, Hughes remains cautious about the SEC’s future approach to crypto regulation. He also noted that this development might expose “tensions in the legal theories” the SEC has been using to justify its enforcement actions.