The launch of Bitcoin ETFs in the US is directly linked to a surge in Bitcoin's value between January and March.
In the meantime, Ethereum's status as both a commodity and security makes its ETF approval unlikely.
Michael Saylor, the executive chair of MicroStrategy, believes the SEC will label Ethereum a security.
Saylor also suggests a similar classification for other cryptos like Binance Coin, Solana and even XRP.
Cryptos categorized as securities may also face delays in ETF approvals, leading to dampened hopes from issuers and investors
Since the launch of the 11 spot Bitcoin ETFs in the US financial markets, data from Farside shows that these exchange-traded products (ETPs) have garnered around $11.5 billion worth of liquidity, and may have even played a direct role in Bitcoin's growth between January to March 2024.
Judging by the success of these massive ETFs, speculation has now shifted to Ethereum.
If the Bitcoin ETFs could perform this many wonders for the price of Bitcoin, why shouldn't they do the same for Ethereum?
The issue with approving crypto-based ETFs boils down to the difference between securities and commodities.
The basic difference between these two classes of investments is that securities "represent" ownership.
This means that when a person buys a security, they are buying a piece of the company that issued said security, rather than actual goods.
Commodities, on the other hand, are actual goods that can be bought and sold. Like gold, oil, silver or even wheat.
The regulatory framework for securities is a lot more complicated than for commodities.
This explains the SEC's reluctance to approve ETFs for cryptocurrencies that are classified as securities.
So far, Bitcoin, on the one hand, has been proven to be a commodity.
On the other hand, Ethereum also classifies as a commodity in some ways—but also as a security in others.
This means that the U.S. SEC (Securities and Exchange Commission) is unsure what to do with Ethereum, and even its current chair, Gary Gensler has been avoiding the subject of Ethereum’s classification for months now.
The issue with Ethereum’s classification
Michael Saylor, the executive chair of MicroStrategy, has just shared some of his thoughts on the matter.
And as it turns out, we might have to wait a while before seeing any ETF on Ethereum, or even any other crypto for now.
The Bitcoin for Corporations conference was held on 1 May and had Michael Saylor as a speaker.
During his address, Saylor stated that he believes the SEC will classify Ethereum as a security, rather than a commodity like Bitcoin.
As established earlier, this means that the approval of the long-awaited Ethereum ETFs might come later than expected.
Saylor also suggested that the issuers who are currently lobbying for these Ethereum ETFs might be experiencing a setback soon, as the SEC’s approval (or denial) deadline approaches.
But Saylor didn’t stop at Ethereum.
He also mentioned other cryptocurrencies like Binance Coin, Solana, XRP and even Cardano, stating that all of these cryptocurrencies will be tagged as securities, and therefore cannot be established as ETFs, traded on Wall Street, or considered by any other mainstream institutional investors.
This comes right on the heel of the May 23 and 24 deadlines for the VanEck and ARK Invest applications.
Overall, the regulatory landscape might change sometime in the future.
However, until then, these cryptocurrencies under the securities classifications might not be seeing ETFs anytime soon.
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