Will the Ethereum ETF Follow Bitcoin's Approval? Industry Experts Are Optimistic About the Prospects

More than a month after the chairman of the United States Securities and Exchange Commission ( SEC ) approved 11 Bitcoin spot ETFs, the crypto industry now expects that an Ethereum spot ETF could receive similar approval as early as May this year.

According to a series of interviews, the outlook for the approval of the world's second-largest digital asset spot product in 2024 is generally optimistic. Not only does the cryptocurrency industry hold this view, but some securities lawyers and traditional Wall Street participants also share the same perspective.

However, there are also skeptical voices. Some people point out that the SEC chairman's past attitude toward the legitimacy of Ethereum has been somewhat ambiguous, believing that it may be an unregistered digital security and thus unsuitable for an ETF. Another concern is that, compared to Bitcoin, Ethereum lacks broad foundational and institutional support in the financial industry.

Nevertheless, some securities lawyers have indicated that the approval process for Bitcoin spot ETFs provides a blueprint for the approval of Ethereum ETFs. Marc Powers, a blockchain professor at the Florida International University College of Law and a former SEC enforcement lawyer, believes that when the same factors in the approval of Bitcoin spot ETFs are at play here as well, the SEC will find it difficult to present new reasons to deny the Ethereum spot ETF.

Due to an asset management company winning an appeal against the SEC in court last August, nearly ten spot Bitcoin ETFs were approved on January 10 of this year. This unprecedented event has paved the way for the approval of other digital asset ETFs.

The Washington D.C. Appeals Court's ruling supports the application to convert the Bitcoin Trust into a spot ETF, stating that the SEC's previous rejection was "arbitrary and capricious." The court questioned the SEC's claim that there is a fundamental difference between spot ETFs and futures ETFs, and that spot ETFs pose greater risks to retail investors.

This victory is seen as a significant watershed moment for the cryptocurrency industry and a signal for other issuers to launch their Bitcoin spot products in the market. Subsequently, the SEC began engaging with several issuers on how to provide Bitcoin within traditional ETF packaging.

SEC Commissioner Hester Peirce publicly stated that the committee should not require the court to approve the products that people wish to invest in.

Another reason to believe that the SEC will have a positive attitude towards the Ethereum spot ETF this year is the growing demand from Wall Street's large companies. Several firms managing substantial assets have applied to launch an Ethereum spot ETF.

Andrew Keys, co-founder of DARMA Capital, pointed out that Ethereum is a product that is different from Bitcoin and has its own uniqueness. Many companies building applications on the Ethereum blockchain have seen the long-term value of commercializing it.

Experts also pointed out that the existence of the Ethereum futures market is another reason why the SEC finds it difficult to reject a spot Ethereum ETF. A certain exchange launched Bitcoin futures in 2017 and Ethereum futures in 2021.

However, some believe that the SEC's approval of an Ethereum spot ETF in 2024 is ambitious. The SEC chairman's ambiguous stance on whether Ethereum is a security is seen as a potential risk factor. The upgrade of Ethereum to the PoS mechanism in 2022 has further fueled speculation in this regard.

Despite differing opinions, most industry insiders remain optimistic about the prospects of the Ethereum ETF, believing it will be approved in the near future.