The recent approval by the U.S. securities regulator for spot Ether exchange-traded funds (ETFs) did not happen abruptly under political duress, according to analysts at Bernstein, a notable research and brokerage firm. Contrary to initial beliefs suggesting political pressures, the change in approach by the Securities and Exchange Commission (SEC) towards spot Ether ETFs in May was thought to be influenced by the Democrats' attempt to sway swing voters before the upcoming U.S. election.
However, the credibility of this narrative dwindled after President Joe Biden blocked the SEC's repeal bill of the Staff Accounting Bulletin (SAB) No. 121, as outlined by Bernstein analysts Gautam Chhugani and Mahika Sapra in a report on June 3. The analysts pointed out that the SEC was in a predicament regarding the Ether ETF due to its regulatory similarities with spot Bitcoin ETFs.
Drawing parallels between the two, which included market correlations and the presence of active Ether futures products on the Chicago Mercantile Exchange, implied Ether's status as a commodity and posed regulatory dilemmas for the SEC.
The analysts speculated that the SEC opted for a practical resolution to evade potential legal conflicts, leading to the surprising approval of spot Ether ETFs. Despite the unexpected outcome, Bernstein viewed this development favorably for the industry.
In discussions with spot Ether ETF applicants, Bernstein discovered a universal astonishment at the eleventh-hour approval by the SEC. The radio silence from the SEC staff before the approval date had sparked expectations of rejection. Nevertheless, ETF issuers were instructed to resubmit their applications shortly before the approval date.
Like many industry experts, Bernstein anticipates the flow of funds into spot Ether ETFs to be less than that of Bitcoin, but foresees demand from similar market participants. The firm also predicts a positive price movement for Ether leading up to the ETF launch.
The SEC greenlit 19b-4 applications from prominent entities such as VanEck, BlackRock, Fidelity, Grayscale, Franklin Templeton, ARK 21Shares, Invesco Galaxy, and Bitwise for the issuance of spot Ether ETFs on May 23. These approved ETF issuers are now awaiting SEC clearance on the S-1 registration statements, a process that could extend over weeks or months.
Image Source: Bernstein
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