The recent endorsement by the U.S. Securities and Exchange Commission (SEC) for spot Ethereum exchange-traded funds (ETFs) has sparked discussions on the rationale behind this decision. Analysts at the renowned research and brokerage firm Bernstein shed light on the underlying factors driving the SEC's action.

Factors Influencing SEC's Approval of Spot Ethereum ETFs

Initial speculation hinted at political motives where Democrats might have exerted pressure to woo undecided voters before the U.S. Presidential elections. However, the narrative of political influence waned as President Joe Biden intervened by vetoing the proposal to revoke the SEC's Staff Accounting Bulletin (SAB) No. 121.

According to insights shared by Gautam Chhugani and Mahika Sapra from Bernstein, the SEC faced a complex situation regarding Ethereum ETFs due to resemblances with Bitcoin ETFs. These parallels included market correlations, the existence of active Ethereum futures on the Chicago Mercantile Exchange, signaling Ethereum's status as a commodity.

Analysts suggested a pragmatic approach by the SEC to avert potential legal conflicts, hinting at a more intricate decision-making process beyond external pressures.

Despite the surprising approval, Bernstein acknowledged the substantial impact of this decision on market participants, portraying favorable outcomes for the industry. Discussions with Ethereum ETF applicants revealed prevailing expectations of rejection, with the SEC's silence adding to the uncertainty. The sudden approval, accompanied by a sudden request for revised documentation, signified a rapid turn of events.

Comparison with Expected Performance of Spot Bitcoin ETFs

While forecasts predict lower inflows for spot Ethereum ETFs compared to Bitcoin counterparts, Bernstein anticipates a surge in demand from similar market entities, implying a positive price trajectory for Ethereum as the ETF launch nears.

The official SEC confirmation on May 23 encompassed applications from prominent players like VanEck, BlackRock, and Fidelity. These approved ETF sponsors are now in the process of finalizing their registration papers, anticipating a timeline ranging from weeks to months for completion.

The initial publication was sourced from COINTURK NEWS.