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.

 

Why
The
United
States
SEC
Approving
Spot
Ethereum
ETFs
Will
Be
Huge

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, took

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

Bitcoin. 

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.  

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. 

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.

 

ETH
Staking
A
Problem
For
Regulators

There
are
arguments
that
the
United
States
SEC
has resisted classifying
ETH
as
a
security
because
of
staking.
Being
a
proof-of-stake
network,
the
promise
of
yield
could
likely be
interpreted as
the
network
offering
a
guaranteed
profit
or
income. 

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. 

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,

saying

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.

Feature
image
from
Canva,
chart
from
TradingView

Go to Source
Author: Dalmas Ngetich

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