The destiny of spot Ether (ETH) exchange-traded funds could be determined this week by a solitary vote from Gary Gensler, the chair of the United States Securities and Exchange Commission (SEC), if history is any indication.
In January, the approval of spot Bitcoin ETFs hinged on a five-commissioner panel. Two crypto-friendly commissioners, Hester Pierce and Mark Uyeda, voted in favor of approving the ETFs, while Commissioners Caroline Crenshaw and Jaime Lizárraga opposed them. Gensler also voted in favor, leading many to believe that his vote ultimately secured approval for spot Bitcoin ETFs, which were granted with a 3-2 vote on January 10, 2024.
This week, the same five SEC Commissioners are set to cast their votes on VanEck’s spot Ether ETF on May 23. Here’s what we know about them.
Hester Peirce, also known as “Crypto Mom,” is known for her bullish stance on digital assets and her desire to integrate more decentralization into the financial system. She has not confirmed how she will vote on the spot Ether ETFs, but she has shown her support for the Ethereum community by attending and speaking at ETHDenver in Colorado in late February.
Peirce has criticized the SEC’s approach to overseeing the cryptocurrency industry in the past, describing some aspects of the regulator’s approach as “unproductive” and “pointless.”
Caroline Crenshaw, on the other hand, is a strong critic of the cryptocurrency industry and strongly opposed the spot Bitcoin ETF decision. She argued that approving the Bitcoin products would expose investors to price manipulation and fraud within the broader industry. There is no evidence to suggest that Crenshaw has changed her stance on spot crypto ETFs since then.
Mark Uyeda has been the only other Commissioner, aside from Peirce, to criticize the SEC’s “regulation by enforcement” approach towards the cryptocurrency industry. He disagreed with the SEC’s decision to deny a Coinbase petition in December, accusing the agency of behaving arbitrarily and capriciously in its oversight of the industry. Uyeda voted in favor of the spot Bitcoin ETFs but expressed concerns about how the SEC reached its decision.
Jaime Lizárraga voted against approving the spot Bitcoin ETFs and did not issue a statement following the decision. However, he previously stated that Bitcoin had not fulfilled its promise as a viable alternative to traditional finance and genuine financial inclusivity. Lizárraga also opposed the SEC’s “regulation by enforcement” approach towards the cryptocurrency industry and believed that most cryptocurrencies were operating illegally under U.S. securities laws.
Gary Gensler, despite voting in favor of spot Bitcoin ETFs in January, may approach the current wave of Ether ETF applications differently. Speculation suggests that his previous vote was influenced by Grayscale’s successful appeal against the SEC. Gensler has not provided a clear answer on whether Ether is considered a security, even when questioned by Congress.
There are other potential obstacles in the path of spot Ether ETFs. The SEC Division of Enforcement is currently investigating Ether’s status as a potential security. Some fund managers have also claimed that the SEC has been less responsive to spot Ether ETFs. As a result, some applicants anticipate a denial from the SEC this week.
Bloomberg ETF analysts Eric Balchunas and James Seyffart predict a 25% chance of at least one spot Ether ETF being approved on May 23, a decrease from the 70% chance predicted in January.