While Bitcoin prices continue to soar following the confirmation of a spot BTC ETF, many people have become sarcastic about ETH prices, doubting the future of the programmable cryptocurrency in its competition with Solana. Additionally, ETH prices have not moved in tandem with the Bitcoin hype. However, on May 20, rumors of a spot Ethereum ETF getting approval by the SEC circulated online.
On the afternoon of May 20, Bloomberg ETF analyst Eric Balchunas posted on X, mentioning that he is increasing his probability of a spot Ethereum ETF approval from 25% to 75% after “hearing chatter this afternoon that the SEC could be doing a 180”. The price of Ethereum surged almost immediately, rising from below $3,100 to over $3,800 in less than 24 hours.
Update: @JSeyff and I are increasing our odds of spot Ether ETF approval to 75% (up from 25%), hearing chatter this afternoon that SEC could be doing a 180 on this (increasingly political issue), so now everyone scrambling (like us everyone else assumed they'd be denied). See… https://t.co/gcxgYHz3om
— Eric Balchunas (@EricBalchunas) May 20, 2024
Cboe BZX(Chicago Board Options Exchange BZX) filed amended Form 19b-4s late on Tuesday for the VanEck Ethereum Trust, Fidelity Ethereum Fund, Franklin Ethereum Trust, Invesco Galaxy Ethereum ETF, and the ARK 21Shares Ethereum ETF (in the order they filed for a spot Ethereum ETF).
End of Ethereum Staking Services? SEC Classifies It as a Security
According to the Fidelity statement, none of its ETH will be used for staking purposes, as clearly stated in the firm’s amended 19b-4 filing. Furthermore, Alex Thorn, the head of research at Galaxy Research, wrote:
“If the speculation about a reversal from the SEC on the Ethereum ETFs is true, I would guess they might try to distinguish between ‘ETH’ not being a security and ‘staked ETH’ (or even more tenuously, ‘staking-as-a-service ETH’) being classified as a security.”
Continuous SEC decisions regarding the regulation of staked ETH can have several significant impacts on the Ethereum staking rewards mechanism and the service providers involved.
(source: Bitwise Asset Management, "The Leading Ethereum Staking Providers," 2022)
It’s not the first time the SEC has taken action. Earlier last year, Kraken, a U.S.-based crypto trading platform and custodian, settled with the SEC and agreed to discontinue its “Crypto Asset Staking-as-a-Service” program in the U.S. and pay a $30 million fine. At that time, the SEC argued, as it does now, that the staking service offered by Kraken and others violates modern securities rules and that “staking-as-a-service” products are unregulated securities offerings.