New insights have emerged from a recent filing with the United States Securities and Exchange Commission (SEC), indicating that there is a possibility that Ether (ETH) might be classified as a security. On May 13, Scott Johnsson, an associate at Davis Polk and Wardwell, analyzed a filing made by BlackRock on March 4. The filing, which pertained to BlackRock’s application to list and trade a spot Ether exchange-traded fund (ETF) on the Nasdaq, extended the deadline for the SEC to make a decision on the ETF until June. Additionally, it invited public feedback on whether the investment vehicle could be considered a commodity.
Johnsson commented, “The clear intention here is to potentially reject the filings on the grounds that they have been improperly categorized as commodity-based trust shares and do not qualify if they involve a security.”
According to ETF analyst Eric Balchunas, the SEC filing was “deeply buried within a mountain of legal jargon,” but this did not alter his belief that the chances of the SEC approving a spot Ether ETF were highly unlikely. The SEC must make a decision on VanEck’s spot Ether ETF by May 23, which is the first of several applications awaiting approval.
If the SEC rejects VanEck’s application, it could also deny spot Ether ETFs from ARK 21Shares, Hashdex, Invesco Galaxy, BlackRock, and Fidelity. Grayscale unexpectedly withdrew its spot Ether ETF application on May 7, while VanEck CEO Jan van Eck expressed doubts about his company’s offering being approved in May.
The SEC’s determination hinges on whether Ether is classified as a security or a commodity. Despite previous statements from SEC Chair Gary Gensler asserting that ETH is not a security, reports suggest that the commission is conducting an investigation into Ether. Gensler is scheduled to speak at the Investment Company Institute summit in Washington, D.C. on May 23.
Magazine:
The SEC and Ripple case are nearing a conclusion, Grayscale has withdrawn its ETF filing, and more: Hodler’s Digest, May 5–11