One Crucial Factor for Ethereum ETF Approval: Bitfinex’s Head of Derivatives

The industry is bustling with the trading of the newly introduced spot Bitcoin ETF in the United States, yet there’s no equivalent for Ethereum.

However, Jag Kooner, Bitfinex’s Head of Derivatives, suggests that the approval of a Bitcoin ETF could impact the SEC’s view on an Ethereum ETF, likely influenced by Ether’s classification as a security or commodity.

While speaking to CryptoPotato, Kooner highlighted that Ethereum ETFs swiftly emerged in other regions following the launch of the first Bitcoin ETF, particularly in Canada, where regulators were comfortable with the product due to the presence of a regulated futures market for ETH. This environment facilitated risk management for market makers during the creation and redemption of units.

Ethereum’s Path to ETF Approval

The Bitfinex exec also noted SEC chairman Gary Gensler’s stance, suggesting that crypto other than Bitcoin are viewed as securities, contrasting with Bloomberg analyst James Seyffart’s observation that the SEC appears to regard Ethereum as a commodity, given the implicit acceptance of Ethereum futures-based ETFs.

The entry of prominent financial entities like BlackRock into the Bitcoin ETF space signaled a positive trajectory for crypto ETFs, potentially extending to Ethereum ETFs, as institutional participation often validates the market for regulators.

However, initial attempts by Grayscale and BlackRock to convert their Ethereum trusts into ETFs faced SEC pushback, underscoring the importance of Ether’s categorization. While spot Bitcoin ETFs have seen favorable trends, driven partly by GBTC’s substantial investment, a similar scenario could unfold for Ethereum, according to Kooner, albeit contingent on Ether’s recognition as a commodity.

“However, it must be noted that ETFs serve the purpose of bridging tradfi US investors and traders and crypto and the same could most likely not be true for other crypto assets which have not stood the test of time and established the reputation of “digital gold” or a commodity as the largest crypto asset by market capitalization. An example could be the lackluster performance on the launch of futures Ethereum ETFs in comparison to futures-based Bitcoin ETFs.”

When Spot Ethereum ETF?

TD Cowen, through its Washington Research Group led by Jaret Seiberg, has outlined a clearer timeline for the potential approval of a spot Ethereum ETF in the United States, targeting late 2025 or early 2026.

Despite previous speculation that approval could occur post-November 2024 elections, the bank now anticipates a delay, stating that the SEC is unlikely to approve a fund dedicated to Ether in 2024. This decision is speculated to have been influenced by political factors, particularly the potential backlash from progressive Democrats following the recent approval of a spot Bitcoin ETF.

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2024-01-30 17:56