Ethereum (ETH), the second-largest cryptocurrency by market capitalization, has witnessed a notable surge of 17% in response to growing optimism surrounding the potential approval of its exchange-traded fund (ETF) by the U.S. Securities and Exchange Commission (SEC).
On May 20th, Ethereum experienced a substantial uptick, presently priced at $3,658, accompanied by a 24-hour trading volume reaching $37 billion. This surge was catalyzed by Eric Balchunas, a senior analyst at Bloomberg, who revised the likelihood of an Ethereum ETF approval from 25% to 75%.
Balchunas highlighted the SEC‘s expedited review process for ETF applications, suggesting potential political pressures driving this acceleration, particularly given the agency’s historically limited engagement with ETF aspirants.
Additionally, there are indications that the SEC is encouraging major exchanges like the NYSE and Nasdaq to refine their submissions, although formal confirmation from the regulatory body is pending.
Nate Geraci, co-founder of the ETF Institute and president of the ETF Store, emphasized that the final decision on the registration requirement for individual funds (S-1) remains pending. Geraci pointed out the possibility of the SEC accepting exchange rule amendments (19b-4s) independently of fund registration (S-1), potentially extending beyond the May 23 deadline set by VanEck for its Ethereum spot ETF application.
Such a delay could afford regulators more time to scrutinize and approve these filings, particularly considering the complexities and risks associated with Proof-of-Stake (PoS) cryptocurrency systems.
Notably, the SEC has been evaluating whether ether, Ethereum’s native asset, qualifies as a security, particularly following the network’s transition from a proof-of-work (PoW) to a proof-of-stake (PoS) consensus mechanism. A formal investigation has been initiated in this regard.
Should the SEC determine ether to be a security, it could lead to the rejection of spot ether ETF applications.
In parallel, analysts at QCP Capital have pointed out the subdued market sentiment, coupled with the potential approval of a spot Ethereum ETF, which could trigger a short squeeze. This, in turn, could propel ETH back to its recent highs of March 12th, where it was trading at $4,066, according to data from CoinMarketCap.
