Ferrums Chief Technology Officer advises against jumping to conclusions about ETH
Since the introduction of Bitcoin ETFs in January, the cryptocurrency industry has been eagerly anticipating the approval of Ethereum by the US Securities and Exchange Commission. Finally, in May, just as hope was dwindling, the commission made the decision to give the green light to the 19b-4 forms for spot Ether ETFs.
Taha Abbasi, the CTO at Ferrum Labs, highlighted the significance of this decision, stating that it is expected to be a significant step towards widespread adoption. “It demonstrates to the world that L1 and related assets are operating as intended and are now officially recognized by regulatory authorities,” Abbasi shared with crypto.news.
This unexpected yet highly anticipated development has raised numerous questions about how regulators perceive the second-largest cryptocurrency. Is it no longer considered a security? Is it now classified as a commodity? Ether ETFs have been placed under the Securities Act of 1933 instead of the more restrictive Investment Company Act of 1940.
The decision to classify Ether ETFs under the Securities Act of 1933 means that these entities must disclose detailed information about their holdings and operations to ensure that investors are well-informed. This move does not provide a definitive answer but rather indicates a more balanced regulatory environment that acknowledges the unique characteristics of digital assets.
Abbasi cautioned against making hasty conclusions, emphasizing that the recent approval pertains to the ETP product’s compliance with regulatory requirements for securities offerings rather than a clear classification of ETH itself. He believes that the ongoing debate about whether ETH is a security will depend on future regulatory actions and interpretations.
The inability to stake ETH within these ETFs was another key aspect of the recent approval. The SEC views staking as an illegal offering by cryptocurrency platforms and has taken action against major players like Coinbase and Kraken for offering staking services. Abbasi noted that the absence of staking could impact the attractiveness of Ether ETFs, as it eliminates unique benefits and may lead to potential opportunity costs and competitive disadvantages.
Despite these challenges, Abbasi suggested that ETP issuers could still attract a substantial investor base by targeting specific segments and effectively communicating the strengths of their products. The approval process for S-1 registrations for the ETF filings is ongoing, with expectations of a potential June launch for the ETF product.
However, Abbasi speculated that it could realistically take anywhere from 6 to 18 months before Ether ETFs are available for trading on exchanges. He advised market participants to stay informed about regulatory developments and engage in the public comment process to positively influence the outcome.
