SEC filings indicate exploration of reasons for potential denial of spot Ether ETFs
A March 4 filing for BlackRock’s spot Ether ETF requested feedback on whether the investment vehicle could be classified as a commodity.
Analysts have dissected details from a March filing with the United States Securities and Exchange Commission (SEC), indicating that the regulator may contemplate labeling Ether (ETH) as a security.
In a May 13 post, Davis Polk and Wardwell Associate Scott Johnsson reviewed a March 4 filing from BlackRock regarding its application to list and trade a spot Ether exchange-traded fund on the Nasdaq. The filing extended the deadline for the commission to decide on a spot Ether ETF from BlackRock until June while also inviting public feedback on whether the investment vehicle could be categorized as a commodity.
“The clear intention is to potentially reject on the basis that these spot filings are improperly categorized as commodity-based trust shares and do not qualify if they are holding a security,” said Johnsson.
According to Bloomberg ETF analyst Eric Balchunas, the SEC filing was “buried 50 feet deep in a pile of legalese,” but this did not alter his speculation that the regulator’s likelihood of approving a spot Ether ETF was “slim to none.” The SEC is set to decide whether to approve or reject VanEck’s spot Ether ETF by May 23 — the first of several applications awaiting review.
If the SEC rejects VanEck’s application, it could also decline spot Ether ETFs from ARK 21Shares, Hashdex, Invesco Galaxy, BlackRock, and Fidelity. Grayscale withdrew its spot Ether ETF application on May 7 without providing an explanation. VanEck CEO Jan van Eck reportedly expressed doubt that the SEC would approve his company’s offering in May.
At the core of the SEC’s decision lies the question of whether the commission views ETH as a security or commodity. Despite numerous public statements from Chair Gary Gensler asserting that ETH is not a security, reports suggest that the commission has initiated an inquiry into Ether. Gensler is scheduled to speak at the Investment Company Institute summit in Washington, D.C., on May 23.
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