According to Bloomberg, in a key development for the cryptocurrency industry, the US Securities and Exchange Commission (SEC) is reportedly set to allow the launch of exchange-traded funds (ETFs) based on Ethereum (ETH) futures.
This move marks a significant win for numerous firms that have long sought to introduce such products. While the SEC has previously hesitated to approve ETFs directly tied to cryptocurrencies, the decision to greenlight an Ethereum futures ETF could have profound implications for Ethereum’s classification as a non-security.
This development also holds potential ramifications for other cryptocurrencies, as the SEC’s stance on where the line between security and non-security lies becomes a subject of litigation.
Ethereum Paradigm Shift
According to Bloomberg’s report, sources familiar with the matter claim the SEC is unlikely to block the ETFs based on futures contracts for Ethereum, which is currently the second-largest cryptocurrency by market capitalization.
Nearly a dozen companies, including prominent names like Volatility Shares, Bitwise, Roundhill, and ProShares, have filed applications to launch these ETFs. While it remains unclear which funds will receive approval, insiders suggest that several may be granted the green light as early as October.
This anticipated approval of an Ethereum futures ETF by the SEC could have far-reaching implications for the regulatory treatment of cryptocurrencies.
The SEC’s reluctance to approve ETFs directly tied to cryptocurrencies has spurred speculation that derivative-based products would offer a potential pathway to market access.
On this matter, crypto analyst Adam Cochran has highlighted that the SEC potentially approving an ETF based on Ethereum futures contracts implicitly acknowledges that Ethereum itself is not considered a security.
This decision challenges the notion that Ethereum should be regulated as a traditional financial security, considering its proof-of-stake mechanism, purpose, and usage.
Cochran further believes that the SEC’s approval of an Ethereum futures ETF bolsters Ethereum’s non-security status and sets a precedent that could impact other cryptocurrencies facing regulatory scrutiny.
The ongoing legal battle between the SEC and Grayscale Investments over rejecting their Bitcoin trust’s conversion into an ETF highlights the agency’s concerns regarding investor protection, manipulation risks, and price…
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