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Is the SEC going to approve Ethereum ETFs as early as this week?


Ethereum prices are trading sharply higher in response to two Bloomberg analysts tweeting that they are hearing chatter that the SEC will approve ETH ETFs this week. The futures market has spiked almost 20%, driving crypto prices higher across the board, in response to the development.

It had previously been suggested that the SEC was likely to reject ETH ETF proposals. However, according to James Seyffart and Eric Balchunas, odds of SEC approvals have now jumped to 75% from 25% prior after a U-turn in sentiment at the SEC.

Sources close to the SEC told Fox Business that the US regulator is now taking its cues from recent court rulings and prior guidance on Ethereum ETFs. Nine issuers may be granted permission to offer ETH ETF products.

Bullish opportunities in crypto

Following prior delays and postponements, the SEC is due to deliver a final decision on a number of fund applications this week. If approved, this would open the door to a fresh wave of institutional demand which should drive ETH firmly higher near-term, while also boosting the broader crypto market.

Ethereum prices have undergone a laboured correction lower over recent months, following the rally we saw across February and early March linked to the strength in Bitcoin.

Ethereum driving Bitcoin higher

However, it’s now ETH driving BTC higher and if we see SEC approvals this week, it could well provide the platform for a fresh breakout across crypto markets, particularly with the current backdrop of increased Fed easing expectations.

The deadline for SEC approval is Thursday. This is when the regulator needs to make a call on 19b-4 applications that have been filed by the Cboe, asking for permission to list spot ETFs. Among the applications are those from VanEck and Ark Investments.

However be warned that this is an extensive process: the SEC would also need to approve S-1 registration statements on the ETF issuers, so for buyers, we may not see actual spot ETH ETFs before the end of this year.

SEC keeps up the pressure on Uniswap Labs

That said, the SEC is not letting up on its action against Uniswap Labs, a crypto market custodian. The SEC issued a Wells notice against Uniswap Labs last month, notifying the dcentralised finance specialist of possible regulatory violations. Uniswap has since responded with a 40 page filing which went in on Tuesday.

Uniswap is arguing that the SEC is still being confusing around its definitions of what represents an exchange, a broker or an investment contract within the crypto space. The Wells notice is being viewed by Uniswap lawyers as the opening barrage in what could be a sustained attack on the crypto custodian.

It seems as if the SEC is becoming increasingly focused on the Ethereum market, and especially those firms handling ETH in the decentralised space. Other firms that are facing SEC scrutiny at the moment include TradeStation, ShapeShift and Consensys.

Consensys launched a pre-emptive lawsuit against the SEC last month, arguing that the regulator was starting to step outside the bounds of its own authority. This was in response to three sub-poenas and a Wells notice. Joseph Lubin, CEO of Consenys, told CNBC he thought the SEC was setting out to shut down the ETH network altogether.

This obviously contrasts heavily with the theory that a spot ETH ETF is about to get the green light. Welcome to the byzantine maze of US financial regulation!

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This article does not constitute investment advice. Make sure you do your own research or consult a professional advisor.

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