- The inclusion of staking in filings for Ether ETFs could indicate that regulators want to keep a back door open for future scrutiny on whether staking is a security.
- •The SEC’s approval of spot Ethereum ETFs is likely a politically driven move, and the regulatory attitude towards crypto may change after the 2024 presidential election.
- While Ethereum’s price may see an upside after ETF trading begins, institutional demand for spot ETH ETFs is uncertain, and regulatory scrutiny on staking could continue, leading to potential market volatility.
The SEC recently approved several spot Ethereum ETFs, but included provisions around staking that indicate regulators may still try to classify it as a security.
Background on Ether ETF Approvals
The SEC recently approved several filings for spot Ethereum ETFs under Rule 19b-4, which allows listing on exchanges without full approval. However, the products still need final clearance to actually begin trading, which is not guaranteed.
The approvals came after much debate around whether staking Ether should be considered an investment contract and therefore a security. The SEC has argued staking meets the Howey Test criteria, while the ETF providers disputed this.
Ultimately the filings were approved with staking provisions included, indicating a compromise with the SEC. This could mean the SEC is keeping the door open for further scrutiny of staking.
Ongoing Uncertainty Around Staking
It’s too early to declare full victory for Ethereum until the S-1 filings are approved and ETF trading begins. The political limbo in the US this election year means timeframes are uncertain.
Plus, institutional investors may be wary of getting involved until staking is definitively cleared. Their demand is not as high for Ether ETFs compared to Bitcoin.
The Focus Will Stay on Ethereum
Once trading begins, Ether price upside is likely. This could kick off an altcoin rally, but gains may remain concentrated in Ethereum rather than spreading to other chains.
The SEC is unlikely to approve spot ETFs for other cryptos soon. These will remain highly speculative.
Conclusion
The compromise on staking provisions indicates the SEC may still try to classify it as a security down the line. Investors should prepare for ongoing uncertainty and volatility.
Much depends on the election result and how the SEC’s stance develops. But they seem intent on keeping staking under scrutiny for now.
