The chances of an ETH ETF being approved are high during the tenure of SEC Chairman Gary Gensler.
Both Jurina and Crypto Valley Exchange co-founder and chief product officer James Davies pointed to recent regulatory developments, such as minor changes to Form 19b-4 requirements, as signs that approval is imminent.
“Everyone knows the ETH ETF is going to go through pretty soon,” Davis said. “The SEC is following its pre-approval process, asking submitters to make minor amendments to their applications, and they wouldn’t do that if it was clear it wasn’t going to go through.”
If rejected, the most likely outcome would be a flurry of lawsuits, similar to the reaction after the first rejection of a spot Bitcoin ETF.
The applicant may challenge the SEC’s decision in court.
Davis explained, “If the BTC ETF approval story is informative, then we may well get an ETH ETF approved as a result of a legal challenge.”
Why it matters: The approval of an ETH ETF is significant as it will increase the credibility of the cryptocurrency industry.
“Given the SEC’s approval, ETFs add credibility to the industry,” Jurina noted.
This will attract larger funds and institutional investors that have been hesitant due to regulatory uncertainty, potentially leading to a large influx of capital and strengthening Ethereum’s market position.
While the approval of an ETH ETF could pave the way for other crypto asset ETFs, analysts like Davis believe Ethereum’s unique position in the industry makes it an outlier.
“The wider adoption of other digital asset ETFs will require significant market infrastructure development,” Davis said.
“We need to find places where we can hedge other tokens instantly and in a cost-effective way, and have the depth to allow ETF providers to manage risk.”
If an ETH ETF is approved, the impact on the price of ETH tokens could be significant.
“The market is not expecting the application to be rejected,” Jurina commented, adding that there could also be political repercussions if the SEC rejects the application at this stage.
"Household names have applied for ETFs and invested a lot of money in their construction. If the SEC rejects it at such a late stage, it will be a shock and have political repercussions, which Biden obviously does not want to see at the moment."
Next Steps: For those looking to stay ahead of the curve and gain insight into the future of digital assets, Benzinga’s Future of Digital Assets event on November 19th will be a vital gathering.
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