Galaxy Digital’s Alex Thorn means that the SEC may classify staked Ethereum as a safety in a bid to discover a loop to approve spot Ethereum ETF.
The U.S. Securities and Change Fee (SEC) may make an eyebrow-raising flip relating to the approval of spot Ethereum exchange-traded funds (ETFs), based on Galaxy Digital head of analysis Alex Thorn.
In an X submit on Might 21, Thorn speculated that the SEC may draw a nuanced distinction between Ethereum and staked Ethereum, probably classifying the latter as a safety.
“If the hypothesis a few 180 from SEC on the Ethereum ETFs is true, I’d guess they attempt to thread a needle between ‘ETH’ NOT being a safety and ‘staked ETH’ (or much more flimsily, ‘staking as a service ETH’) as BEING a safety.”
Alex Thorn
This differentiation may have important implications for spot Ethereum ETFs, which the SEC has been hesitant to approve to this point.
Thorn says the change of technique would align with the SEC’s ongoing authorized battles and investigations, permitting the fee to approve Ethereum ETFs whereas adhering to its earlier arguments and positions. But, the chosen method may additionally contain particular restrictions on spot Ethereum ETFs, Thorn says.
“On this case and maybe for different causes, you’ll anticipate SEC to ban the ETFs from staking the ETH they maintain.”
Alex Thorn
By distinguishing between ETH and staked ETH, the SEC may navigate the complicated regulatory panorama, probably permitting for the introduction of Ethereum ETFs whereas sustaining a strict regulatory framework round staked property and different altcoins. Nevertheless, it’s not clear how precisely the SEC would deal with, for instance, tokenized variations of Ethereum or Bitcoin for utilization in layer-2 options (together with lending).
Within the meantime, Ethereum surged by over 17% following information that the SEC may truly approve spot ETH ETFs, regardless of the market’s earlier consensus that the watchdog wouldn’t give the inexperienced mild.
Bloomberg senior analyst Eric Balchunas, who beforehand stated that the chances of spot Ethereum ETF approval have been “slim to none,” made a U-turn on Might 20. In an X submit, he raised the possibility of approval from 25% to 75%, implying that the SEC’s quickening tempo to approve the ETF could be a results of the company dealing with political stress, as their earlier stance confirmed little engagement with ETF candidates.