The market has already observed a rise in ETH prices following the SEC’s approval of a spot Bitcoin ETF, and analysts are predicting a similar approval for an Ethereum ETF. Nonetheless, the SEC’s view of Bitcoin as an ‘unsecured commodity’ was a key factor in approving the Bitcoin ETF, and things may be different for Ethereum. However, with BlackRock’s CEO’s support for the Ethereum ETF, the SEC’s view of Ethereum as a security or commodity may change depending on market sentiment.
ETH price rises with support from Larry Fink
BlackRock (BLK) CEO Larry Fink has endorsed the concept of an Ether (ETH) exchange-traded fund (ETF), a day after the launch of the much-anticipated Bitcoin (BTC) ETF. “I see value in holding an Ethereum ETF,” Fink said. in an interview with CNBC on Friday. “This is just a stepping stone towards tokenization, and I really believe this is where we’re going.”
Tokenization refers to the process of representing assets, whether physical or digital, as tokens on a blockchain. Fink believes tokenization has the potential to solve problems related to money laundering and various forms of corruption.
The $9 trillion asset management company appears to be considering listing a product similar to Ethereum’s native token, in line with its gradual move toward tokenization. Fink also noted that he views cryptocurrencies as an asset class rather than a currency. He particularly highlighted Bitcoin, describing it as “an asset class that protects you” in the face of geopolitical risks.
“It’s no different from what gold has represented for thousands of years,” he said. Unlike gold, we have almost reached the limit of the amount of Bitcoin that can be created.”
With support from BlackRock, the ETHBTC rate surged to October highs and is currently trading at 0.06039.
SEC’s Potential Opinion on Ethereum ETF
The SEC has postponed a decision on the Ethereum ETF and will need more than 45 days to review a proposed rule change that would allow Grayscale to convert its Ethereum trust into a spot Ethereum ETF. The extended deadline is now set for January 25, 2024. Additionally, as disclosed in a separate document, the SEC postponed a decision on an Ethereum ETF proposed by cryptocurrency asset management firm Hashdex.
However, debate continues as to whether Ethereum should be classified as a security or a commodity for ETF approval purposes. The SEC’s approval of an Ethereum futures ETF last October signaled implicit recognition of Ethereum, the world’s second-largest cryptocurrency by market capitalization, as a commodity, according to Bloomberg analysts.
The approval of an Ether futures ETF in October 2023 and the recent launch of a spot Bitcoin ETF suggest that we can expect additional applications for a spot Ethereum ETF as early as later this year. However, if the SEC classifies Ethereum as a security, legal issues will likely arise related to this designation.