Title: Unveiling the True Motives Behind the Approval of Ethereum ETFs
Subtitle: Bernstein Analysts Challenge Political Influence Theory
Introduction:
The recent approval of spot Ethereum ETFs by the Securities and Exchange Commission (SEC) has raised questions about the underlying motives behind this decision. Analysts at Bernstein, a research and brokerage firm, have delved into the matter and provided insights into the potential reasons driving the SEC’s approval.
Political Motives or Pragmatic Considerations?
After US President Joe Biden vetoed the SAB 121 bill, which aimed to repeal anti-cryptocurrency regulations, Bernstein analysts Gautam Chhugani and Mahika Sapra examined the possibility of political influence playing a role in the approval of Ethereum ETFs. However, their analysis suggests that pragmatic considerations were more likely to have influenced the SEC’s decision.
In a note to clients, Chhugani and Sapra pointed out that President Biden’s veto of the SAB 121 repeal bill weakened the argument for political motives. They proposed that the SEC may have taken a pragmatic approach to avoid potential legal challenges associated with the bill.
Approval Process and Regulatory Similarities:
The SEC’s approval of eight spot Ethereum ETFs, including offerings from BlackRock and Fidelity, was granted through the submission of 19b-4 forms on May 23. However, before trading can commence, these issuers must have their S-1 registration statements go into effect, which can take some time.
Analysts have highlighted the similarities in regulatory structures between Ethereum and Bitcoin ETFs, suggesting that the SEC felt compelled to approve the Ethereum ETFs due to these resemblances. They argue that the SEC found itself backed into a corner, given the comparable spot/futures correlation and the active ETH futures market on the Chicago Mercantile Exchange (CME), indicating the commodity status of Ethereum.
Future Outlook and Potential Price Movements:
Looking ahead, Bernstein analysts anticipate a strong demand for new Ethereum ETFs, although they expect lower allocations compared to spot Bitcoin ETFs. They believe that Ethereum’s unique supply dynamics, including staking, smart contracts, and HODL data, could drive positive price movement following the launch of ETFs. The launch is predicted to occur within the next few days to a month.
Disclaimer: The information provided in this article is for informational purposes only and should not be considered investment advice.
Conclusion:
While speculations about political motives behind the approval of Ethereum ETFs have emerged, Bernstein analysts argue that pragmatic considerations and the need to avoid legal challenges may have been the driving forces for the SEC. As the launch of Ethereum ETFs approaches, analysts anticipate positive price movements driven by Ethereum’s distinctive characteristics.