Ethereum

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The U.S. Securities and Exchange Commission (SEC) just approved ETH ETFs. Its decision to approve 19b-4s has sparked debate on how the regulator views Ether. Industry observers continue to argue whether ETH is a commodity or a security.&nbsp;
According to some industry experts, the U.S. SEC’s approval of spot ETH ETFs is an indirect admission that Ether is, in fact, a commodity. The debate about Ether’s categorization arose after the SEC effectively approved spot ETH ETF applications from eight asset management funds.
Also Read: <a href="https://www.cryptopolitan.com/ethereum-security-classification-could-open-eth-etf-doors-says-blackrock-ceo/" rel="noopener noreferrer nofollow">SEC’s Ethereum Security Classification Could Open ETH ETF Doors, Says BlackRock CEO</a>
BlackRock, Bitwise, ARK 21Shares, Invesco, Grayscale, Galaxy, Fidelity, and Franklin Templeton all received approvals for their 19b-4 applications. However, the issuers omitted ETH staking from their applications to receive these approvals from the SEC.
The approval will continue since the U.S. SEC requires all eight ETH ETFs to provide S-1 registration statements for approval.
<h2 id="observers-believe-ether-is-effectively-a-commodity">Observers Believe Ether Is Effectively a Commodity</h2>
According to digital asset lawyer Justin Browder, Ether would undoubtedly be deemed a commodity if the ETH ETFs successfully receive S-1 approvals from the SEC. The S-1 registration statements are needed for the approved ETH ETFs to start trading.
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 If any of the ETH spot ETFs go effective on Form S-1, the debate is over: ETH is not a security.
 There is no legal way for a fund whose assets consist (almost) entirely of securities to go effective on an S-1 (with one exception that doesn’t apply).
 — Justin Browder (@jlb410) <a href="https://twitter.com/jlb410/status/1793037184582226259?ref_src=twsrc%5Etfw" rel="noopener noreferrer nofollow" target="_blank">May 21, 2024</a>
</blockquote>
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Other observers also <a href="https://x.com/TuongvyLe12/status/1793756308610441261" rel="noopener noreferrer nofollow" target="_blank">highlighted</a> some key points that signaled why the U.S. SEC does not consider ETH as a security. The observations argue that according to the law, funds whose assets are 40% or more securities are considered investment companies and must register on form N-1A or N-2, not the S-1, as required by the U.S. SEC.
<blockquote>
 “That the SEC is allowing the registration of these funds – whose assets are well north of 40% ETH – via an S-1 means the question is settled: ETH is not security.”
 – TuongVy on X.
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Industry observers have questioned the U.S. SEC’s requirement to approve S-1 registration statements from ETH ETF issuers.
<h2 id="how-the-sec-views-eth-staking">How The SEC Views ETH Staking</h2>
Typically, Exchange-Traded Funds (ETFs) are commodity-based trusts. The U.S. SEC’s move to approve Ether ETFs would suggest the regulator views Ether as a commodity. However, the regulator shied away from addressing Ether’s categorization when issuing ETH ETF approvals.
Also Read: <a href="https://www.cryptopolitan.com/blackrock-ether-etf-filing-excludes-staking/" rel="noopener noreferrer nofollow">Blackrock’s New Spot Ethereum ETF Filing Excludes Staking</a>
Crypto experts argue that the SEC could potentially view ETH and staked ETH differently. The SEC may distinguish the two and consequently go after staked ETH as a security.
<h2 id="the-sec-officially-approves-eth-etf-applications">The SEC Officially Approves ETH ETF Applications</h2>
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 This week, this day, has been a rollercoaster unlike any other I’ve seen. ETH is effectively deemed a Commodity as we’ve always known it to be. I’m proud to be on team <a href="https://twitter.com/coinbase?ref_src=twsrc%5Etfw" rel="noopener noreferrer nofollow" target="_blank">@Coinbase</a>, the trusted partner and custodian for many of the issuers who had 19b-4’s approved tonight. <a href="https://t.co/nz1HHFbBSQ" rel="noopener noreferrer nofollow" target="_blank">pic.twitter.com/nz1HHFbBSQ</a>
 — paulgrewal.eth (@iampaulgrewal) <a href="https://twitter.com/iampaulgrewal/status/1793754570986021130?ref_src=twsrc%5Etfw" rel="noopener noreferrer nofollow" target="_blank">May 23, 2024</a>
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The U.S. SEC officially approved eight issuers of Ether ETFs’ 19b-4 applications, and just a few hours later, the industry heated up with conversations about Ether. The crypto community on X (formerly Twitter) is discussing whether Ether is a commodity, whether S-1 forms will be approved, and why the price of ETH isn’t responding positively to the <a href="https://www.cryptopolitan.com/why-crypto-market-down-today/" rel="noopener noreferrer nofollow">ETH ETF news</a>.
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Cryptopolitan reporting by Collins J. Okoth

Industry Observers: What SEC’s ETH ETF Verdict Means for Ether

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