Ethereum

United

Test

Spot

Ethereum is a top performer in the top 10 most valuable coins. At press time, ETH is up an impressive 30% and steady above $3,700 as bulls slice through immediate resistance levels. 
The trigger is the United States Securities and Exchange Commission (SEC) possibly approving the first spot Ethereum exchange-traded funds (ETFs) this week or in the coming days. 
<h2 id="why-the-united-states-sec-approving-spot-ethereum-etfs-will-be-huge">Why The United States SEC Approving Spot Ethereum ETFs Will Be Huge</h2> 
However, while the excitement is high and traders expect further gains, even above $4,100 and all-time highs, the potential approval of this derivative product has ignited a legal debate surrounding the classification of ETH. 
Jake Chervinsky, a lawyer who often comments on crypto matters,&nbsp;<a class="editor-rtfLink" href="https://x.com/jchervinsky/status/1792924835099668527" target="_blank" rel="noopener nofollow">took</a> to X, arguing that should the Commission proceed to greenlight the product, the decision would be a tacit acknowledgment on their part that all unstaked ETH in circulation is commodities, similar to <a href="https://bitcoinist.com/trump-bitcoin-eth-xrp-dogecoin-shib-election/" target="_blank" rel="noopener ">Bitcoin</a>.&nbsp; 
Chervinsky notes that this decision would be a major policy move from the strict regulator. Over the years, the United States SEC has hesitated to classify any asset besides Bitcoin as a commodity. 
Any move to approve the spot Ethereum would be moving the Commission’s hand, indirectly making them endorse ETH as a commodity, similar to Bitcoin. 
It would only make sense. Like spot Bitcoin ETFs issued by, among others, ProShares and Fidelity, the product will track the price of all unstaked ETH.&nbsp;&nbsp; <a href="https://www.tradingview.com/x/x0ZW6iql/" rel="nofollow noopener" target="_blank"><img loading="lazy" decoding="async" class="size-full" src="https://www.tradingview.com/x/x0ZW6iql/" alt="Ethereum price trending upward on the daily chart | Source: ETHUSDT on Binance, TradingView" width="1233" height="592"></a> 
Following the regulator’s reported request to direct interested spot ETH ETF issuers to amend their applications, analysts note an interesting change. 
Combining the recent 19b-4 filings submitted to the United States from applicants like Grayscale, issuers continue to classify their shares under the “Commodity-Based Trust Shares” rule.&nbsp; 
Additionally, Fidelity’s application explicitly mentions that its ETH will not be staked. Some see this deliberate removal of staking from the equation as a strategic move to satisfy the regulator’s potential concerns about securities classification. 
<h2 id="eth-staking-a-problem-for-regulators">ETH Staking A Problem For Regulators</h2> 
There are arguments that the United States SEC has&nbsp;resisted&nbsp;classifying ETH as a security because of staking. Being a proof-of-stake network, the promise of yield could likely&nbsp;be interpreted&nbsp;as the network offering a guaranteed profit or income.&nbsp; 
This feature, in turn, might align ETH as a security under the Howey Test criteria. In that case, ETH would be a security and must be registered with the regulator.&nbsp; 
Still, some say the Howey Test is obsolete, considering that Ethereum and digital assets in general are emerging asset classes. 
Representative Tom Emmer took to X on May 21 to provide clarity, <a class="editor-rtfLink" href="https://x.com/GOPMajorityWhip/status/1792967327933407668" target="_blank" rel="noopener nofollow">saying</a> ongoing efforts are being made for legal clarity via the Securities Clarity Act. This legislation aims to establish that a token itself does not automatically constitute a security.

Lawyer Says United States SEC In A Tight Spot If They Approve Spot Ethereum ETFs

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