The post "Is SEC Halting the Ethereum ETF?" first appeared on 36crypto.com News.
Diving into the correlation between Ethereum ETF filing and its Foundation probe. March 20 reports cite that the Ethereum Foundation â the Swiss non-profit organization at the heart of the Ethereum ecosystem â is facing inquiries from an unnamed âstate authorityâ, according to the groupâs websiteâs GitHub repository.Â
The full scope of the investigation remains unknown at the reporting time. According to the GitHub commit dated Feb.26, 2024, âwe have received a voluntary inquiry from a state authority that included a requirement for confidentialityâ.Â
The vagueness spurred theories about the occurrence, most adopted being the SECâs involvement in probing Ethereum amid potential Ether ETF pre-inspection. The presumption was first brought up by Fortune, explaining that the Securities and Exchange Commission is seeking to classify #ETH as a security.Â
Fortuneâs report also clarifies that the SEC has sent investigative subpoenas to U.S. companies in the past several weeks.Â
The rumored action of the financial regulator was perceived as an outcome of major implications for Ethereum, an Ether ETF, and crypto as a whole. The positive potential of the occurrence may spread to Whitechain, Polygon, and other networks, with financial institutions finally adopting ones.Â
Possible Reasons Behind
An attorney familiar with the situation said to CoinDesk that a Swiss regulator may have served document requests to the Ethereum Foundation and several other companies in cooperation with the U.S. Securities and Exchange Commission (SEC). The initial motives for this remain unclear, while the news marked deep pessimism on the potential ETH ETF approval.Â
James Seyfartt, Bloomberg Intelligence research analyst, noted that his âcautiously optimistic attitude for ETH ETFs has changed from recent monthsâ, hinting at the Ethereum Foundation investigation.Â
Notably, he did not reject the possibility of ETH ETF approval, presuming that it is to be seen this fall.Â
The dominating explanation of the Ethereum Foundation probe remains to be the deliberate halting of Ether ETF initiated by the SEC.Â
This idea was voiced by Travis Kling â Chief Investment Officer (CIO) at Ikigai Asset Management. In his post for X, he claims it to be âa coordinated attack on ETHâ:
âThatâs interesting in light of Larryâs (Larry Fink, CEO at BlackRock) 576-1 record and the simple fact that he is unequivocally more powerful than Gary (Gensler, Chair of the SEC),â added Kling.
The uncertain status of Ether ETF was previously pointed out by Morgan Creekâs SEO Mark Yusko and JP Morganâs analyst Nikolaos Panigirtzoglou. Both stressed the importance of defining Ether as a security to move further with exchange-traded funds approval.Â
By contrast, many saw Rippleâs partial court victory regarding XRP status and constitution of many crypto tokens as commodities by CFTC Chair Ron Behnam as positive developments towards Ether ETF.Â
In January, Fox Business journalist Eleanor Terrett expressed inclination towards certainty of ETH ETF approval, addressing the litigation with Binance. The hopes were expressed during one of the sessions that hinted at the recognition of DAO tokens as securities.Â
Now the journalist believes the #Ethereum Foundation inquiries as a reason why the âSEC has been so mum with the ETH spot ETF issuersâ.Â
âThe SEC staff may be waiting for any lingering investigations to wrap before Gary Gensler gives them direction,â she stated in the post for X.
Political Footprint At Play?
Scott Jonnsson cited a âpolitical factorâ as one of the grounds for the âattackâ. According to the lawyer, the SEC could be using the Ethereum Foundation probe to placate crypto skeptics who have demanded a tougher stance from the agency.
As per Cointelegraphâs report, earlier this month, Senators Jack Reed and Laphonza Butler urged Gary Gensler to halt any further spot crypto ETF approvals. Senator Elizabeth Warren has also been extremely vocal in her disapproval of the investment products.Â
Scott Johnsson also presumed that the SEC could need a non-correlation objection to deny spot Ether ETFs with the help of the Ethereum Foundation investigation. He explains that this may be a temporary solution, as correlation levels are improving over time.Â
Finally, Johnsson sees the SECâs action as killing two birds with one stone: denying spot Ether #ETFsâ while avoiding âundermining the argumentsâ in the bodyâs legal action against Coinbase and Binance.Â
â...given (Ether ETF) approval would be the most stark/explicit endorsement of ETHâs non-security status to date, it did risk undermining CB/Binance and the SECâs entire crypto theory broadly/permanently,â wrote Johnsson in his post for X.Â
How SEC Reacts
In his latest interview with Bloomberg TV earlier this month, Gensler was asked about the status of ETH as a security, to which he replied in a rather obscure way.
âWe do have filings in front of us. Iâm not going to comment. (...) We find motivation in the present for the SEC to further an investigation into ETH security status as an additional pretense to deny approvalâ Gensler stated particularly. Â
The Ether ETF roadmap is yet to see significant developments. âAny rumors of any activityâ that the SEC and its overseas counterparts are engaging in may be correlated with the May 23 deadline the SEC faces,â goes in a related attorney statement relayed by Coindesk.