New findings from a filing with the United States Securities and Exchange Commission (SEC) in March have raised questions about whether Ether (ETH) may be labeled as a security. In a recent analysis by Scott Johnsson, an associate at Davis Polk and Wardwell, it was revealed that BlackRock’s application to list and trade a spot Ether exchange-traded fund (ETF) on the Nasdaq has delayed the SEC’s decision until June. However, the filing also called for public feedback on whether the investment vehicle should be classified as a commodity.
Johnsson pointed out that the purpose behind this move may be to potentially deny the filing on the grounds that these spot filings are incorrectly classified as commodity-based trust shares and would not qualify if they are holding a security. Bloomberg ETF analyst Eric Balchunas, although acknowledging that the SEC filing was difficult to decipher due to its complex language, believes that the regulator is unlikely to approve a spot Ether ETF. The SEC has until May 23 to make a decision on VanEck’s spot Ether ETF, which is the first of several applications in the pipeline.
If VanEck’s application is denied, it could set a precedent for the rejection of spot Ether ETFs from other companies such as ARK 21Shares, Hashdex, Invesco Galaxy, BlackRock, and Fidelity. Grayscale also withdrew its spot Ether ETF application on May 7 without providing an explanation. Jan van Eck, the CEO of VanEck, reportedly has doubts about the approval of his company’s offering in May. The SEC’s decision hinges on whether ETH is considered a security or a commodity. Despite previous statements from SEC Chair Gary Gensler stating that ETH is not a security, reports suggest that the commission has initiated an investigation into Ether. Gensler is scheduled to speak at the Investment Company Institute summit in Washington, D.C. on May 23.