Staking Your Crypto? Beware! The SEC May Have Other Plans After Ether’s Approval!
The approval of spot Ether (ETH) exchange-traded funds (ETFs) by the United States Securities and Exchange Commission (SEC) is seen by industry experts as acknowledgment that Ether is not a security. This move marks a significant shift in the SEC’s stance towards digital assets, with potential implications for other cryptocurrencies.
Expert Opinions on Ether’s Status
James Seyffart, a Bloomberg ETF analyst, stated on the Bankless podcast that the SEC’s approval of these ETFs indicates they view Ether as a commodity. He explained that by approving commodities-based trust shares, the SEC signals they won’t pursue Ether as a security.
Digital asset lawyer Justin Browder supports this view. He believes that if Ether ETFs receive S-1 approval — the final step before trading can commence — it would determine that Ether is not a security.
Implications for Other Tokens
Adam Cochran, a partner at venture capital firm Cinneamhain Ventures, suggests that if Ether is classified as a commodity, this could extend to other cryptocurrency projects. He argues that many digital assets might now be considered commodities, even if this status has not yet been formally recognized.
Concerns Over Staking
Despite this outlook for Ether, experts like Seyffart warn that the SEC may still target activities related to Ether staking. He predicts the SEC will differentiate between Ether and staked Ether, potentially classifying the latter as a security. Digital asset lawyer Joe Carlasare agrees, noting that the SEC could continue to take action against staking service providers even if an Ether ETF is launched.
Ongoing SEC Actions
In April, Ethereum infrastructure firm Consensys received a Wells notice from the SEC, focusing on Metamask’s trading and staking services. This indicates the SEC’s ongoing scrutiny of staking activities.
Finance lawyer Scott Johnsson also highlighted that the SEC did not explicitly confirm Ether’s non-security status in its approval order, suggesting the issue was sidestepped. However, it is expected that the SEC and some of its Commissioners will make an official statement in due course.
ETF Issuers and Approval Status
On May 23, the SEC approved 19b-4 applications from several firms, including VanEck, BlackRock, Fidelity, Grayscale, Franklin Templeton, ARK 21Shares, Invesco Galaxy, and Bitwise, to issue spot Ether ETFs. Many ETF issuers removed staking from their final amendments. Hashdex was the only ETF issuer that did not receive regulatory approval on that day.
The approved ETF issuers must wait for the SEC to sign off on their S-1 registration statements before they can launch their products.
The SEC’s approval of spot Ether ETFs marks a significant development in the regulation of digital assets, signaling a shift in how cryptocurrencies are classified. While Ether may now be seen as a commodity, the SEC’s scrutiny of staking activities suggests that regulatory challenges remain for those involved in staking.
