The SEC on the spot ETH ETFs

May 25, 2024

Overview

The SEC will decide on an Ethereum spot ETF this week, impacting Ethereum and the crypto market. Bloomberg raised approval chances to 75%, causing a 20% rise in Ethereum's price. The SEC's stance on ETH as a security remains uncertain.

2 min. read

2 min. read

2 min. read

This week the SEC will decide whether to approve or deny an Ethereum spot ETF. The decision will have a significant impact on Ethereum and could also affect the overall crypto market.

Spot vs. Futures ETF

Spot ETF: Imagine buying a gold bar. A Spot ETF is similar, but instead of gold, you're buying Bitcoin directly through the ETF. Its price directly reflects Bitcoin's market price, so if Bitcoin goes up, your investment goes up too. 

Futures ETF: Unlike spot ETFs, this is like betting on the price of a specific cryptocurrency in the future. Instead of owning the asset itself, you're buying contracts that agree to buy or sell the asset at a specific price on a set date. It's easier to manage than directly buying the cryptocurrency, but there are potential drawbacks. The price of these contracts can differ from the actual price, and there might be additional fees involved.

ETH as a security

There's confusion about whether Ethereum is an investment (security) or a good (commodity) like gold. The SEC might declare it is a security, causing issues for businesses already involved with ETH. The CFTC, another agency, disagrees and sees ETH more as a commodity. 

Chances of Approval

Bloomberg raised its prediction for the ETF's approval from 25% to 75%, attributing this change to a perceived shift in the SEC's stance. Ethereum went up 20% after the announcement, which signified a significant sentiment shift regarding the ETF approval chances. 

Disclaimer: The information provided in this research paper is for educational and informational purposes only. It does not constitute financial advice, investment guidance, or any solicitation to buy or sell financial instruments. The views expressed herein are those of the authors and do not necessarily reflect the opinions of Kollectiv.

2024