Alex Thorn, the head of research at Galaxy Research, has expressed concerns about the potential classification of staked Ether as a security by the United States Securities and Exchange Commission (SEC). Thorn’s concerns come as expectations grow that the SEC may soon approve spot Ether exchange-traded funds (ETFs).
Thorn has suggested that approving a spot Ether (ETH) ETF could be somewhat consistent with previous court cases. In response to Thorn’s post, a community member has raised concerns about the liquidity hurdles that staking Ether within an ETF may pose, making it challenging to comply with regulatory requirements.
Thorn has addressed this concern by pointing out that lending ETF collateral typically has limits, which could serve as a comparable reference point. However, he has also noted that European exchange-traded products (ETPs) offer staking services.
The SEC has historically sought to classify Ether as a security, and this pattern continues, as indicated in a recent report by Fox Business producer Eleanor Terret. Terret, citing court documents filed by Consensys on April 29, has suggested that the SEC and SEC Chair Gary Gensler have believed for at least a year that Ether was an unregistered security.
According to Bloomberg senior analyst Eric Balchunas, the odds of approving an Ethereum ETF have increased from 25% to 75%. Balchunas attributes this significant change in stance to rumors that the SEC may be reversing its position on the matter due to its growing political implications.