Galaxy Digital’s Alex Thorn suggests the SEC may classify staked Ethereum securities in order to create a loophole to allow spot Ethereum to be approved as an ETF.
Securities and Exchange Commission of the United States (SECThe approval of Ethereum spot exchange-traded fund (ETFsAccording to Galaxy Digital Alex Thorn, head of Research
The following are some of the ways to get in touch with us an X post Thorn speculated, on May 21, that the SEC may draw a fine distinction between Ethereum and staked Ethereum. This could lead to the SEC classifying staked Ethereum as a securities.
“If the speculation about a 180 from SEC on the Ethereum ETFs is true, I would guess they try to thread a needle between ‘ETH’ NOT being a security and ‘staked ETH’ (or even more flimsily, ‘staking as a service ETH’) as BEING a security.”
Alex Thorn
This could be a significant difference for Ethereum spot ETFs that the SEC is reluctant to approve.
Thorn says that the SEC will be aligned with its ongoing investigations and legal cases, which would allow it to adopt Ethereum ETFs without changing any of their previous positions or arguments. Thorn suggests that the new approach may also include restrictions specific to spot Ethereum exchange-traded funds.
“In this case and perhaps for other reasons, you would expect SEC to prohibit the ETFs from staking the ETH they hold.”
Alex Thorn
The SEC can navigate a complex regulatory environment by distinguishing between ETH (staked ETH) and ETH itself. This could allow for Ethereum ETFs to be introduced while still maintaining a tight regulatory framework on altcoins and staked assets. The SEC has not yet clarified how it will handle tokenized Ethereum or Bitcoin used for layer-2 solutions, including lending.
Ethereum surged The market has risen by more than 17% since the news broke that the SEC could approve spot ETFs for ETH, even though the consensus was that they wouldn’t.
Bloomberg Senior Analyst Eric Balchunas who said previously that the chances of spot Ethereum ETF acceptance were low, is now a believer. “slim to none,” The SEC made a U turn on 20 May. He raised his approval rate from 25% to 70% in an X-post, implying the SEC was under political pressure. Their previous stance had shown little engagement with ETF applications.
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Source: crypto.news