- The SEC may be set to approve leveraged ETH futures ETFs.
- The likely approval comes despite an ongoing investigation into whether Ethereum is an unregistered security.
- At the same time, the SEC continues to delay a decision on spot Ethereum ETFs.
The debacle over the SEC’s classification of Ethereum is getting more complicated.
Over the past few weeks, it has become clear that the regulator has the second largest crypto asset in terms of market cap in its cross-hairs, suspecting that the asset may be an unregistered security. For the observers, the situation recently got more complicated as a recent ConsenSys complaint revealed that the SEC’s Ethereum probe has been on for at least a year, months before the agency implicitly signed off on the CFTC’s classification of ETH as a commodity by approving ETH futures ETFs.
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Adding to the growing confusion over the SEC’s stance, the agency now looks set to approve leveraged ETH ETF products.
Leveraged ETH Futures ETF Applicants Feeling “Optimistic”
On Wednesday, May 1, Fox Business journalist Eleanor Terrett reported that leveraged ETH futures ETF applicants felt “optimistic” about their chances of getting approval, citing persons familiar with the matter. The journalist disclosed that these institutions expressed this view based on “positive dialogue” from the SEC.
If the SEC gives the green light as they expect, Volatility Shares’ 2x Ether Strategy ETF (ETHU) will be the first to go live on June 4. As Terrett highlighted, approving these products will add another layer of intrigue to the Ethereum security status debacle.
By approving leveraged ETH futures ETFs, the SEC will stir further confusion by again implicitly accepting the CFTC’s classification of the crypto asset while pending an investigation into whether it is a security.
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Stressing the potential implications of the move, Van Buren Capital General Partner Scott Johnsson asserted that the SEC’s decision on the matter would be “key to watch.”
Beyond the apparent inconsistencies in the regulator’s actions, from a risk perspective, most could not understand the logic of approving leveraged ETH futures ETFs while delaying spot ETFs.
“Make It Make Sense”
For months, the SEC has delayed its decision on spot Ethereum ETF applications, offering no reason for the delay except that it required more time to review applications. With the May 23 deadline for the agency to decide on VanEck’s application looming, the growing consensus among observers and even some applicants is that this application will be denied.
Many have regarded the possibility of the SEC first approving leveraged futures ETFs, which arguably pose greater investment risks than spot offerings, as odd.
Angel Investor Eric Conner sarcastically quipped, “Make so much sense… Much protection!”
Chiming in, The ETF Store, Inc. President Nate Geraci added, “Somebody make it make sense.”
On the Flipside
- The SEC has yet to officially approve the leveraged ETH futures ETFs.
- It will not be the first time the SEC approved leveraged futures ETFs before the spot. The agency had approved leveraged Bitcoin futures ETFs about six months before finally approving the spot product.
Why This Matters
The likely approval of leveraged ETH futures ETFs adds further confusion to the uncertainty surrounding the agency’s classification of Ethereum.
Read this for more on the Ethereum security classification debacle:
How Year-Long ETH Security Probe Paints SEC into a Corner
Learn about Polygon’s (MATIC) recent price action:
Polygon (MATIC) Plunges in BTC-Led Flush: Can It Hold Support?
