Lawmakers Press SEC to Approve Spot Ethereum ETF

Amid mounting enthusiasm for the possible approval of a spot Ether (ETH) exchange-traded fund (ETF) in the United States, members of Congress are urging the securities regulator to endorse this new financial product. A bipartisan coalition, including Republican majority whip Tom Emmer and Democrat Josh Gottheimer, reached out to SEC Chair Gary Gensler on May 22. In their letter, they called for the approval of spot Ether ETFs, positing that such a move would grant investors safer and more regulated access to ETH.

The lawmakers highlighted the importance of maintaining a balanced and fair approach when evaluating new applications for digital asset-backed ETFs. They stressed that the guidelines applied to the approval of spot Bitcoin ETPs should also be considered for upcoming Ether ETF applications, arguing that the legal principles relevant to Bitcoin are equally applicable to Ether.

Bloomberg ETF analyst Eric Balchunas shared updates about the letter on social media on May 23. He noted that the letter’s call for ETFs based on “other digital assets” was intriguing, even though it predominantly discussed Ether. This broader phrasing suggests potential for a wider range of digital asset ETFs, prompting curiosity about the possible speed and extent of the ETF industry’s innovation.

Balchunas anticipated that lawmakers might take advantage of perceived weaknesses in the SEC’s position to introduce a variety of digital asset ETFs, effectively testing the regulator’s boundaries. This development comes as the cryptocurrency community eagerly awaits the SEC’s decision on a proposed Ethereum ETF, expected by the end of the month. The community’s optimism has been buoyed by congressional advocacy for a spot ETH ETF.

On the same day, another faction of lawmakers, including House Financial Services Committee Chairman Patrick McHenry and subcommittee leaders Bill Huizenga, requested the SEC to disclose records related to the custody services provider Prometheum. This group also voiced dissatisfaction with the SEC’s earlier response regarding Ether’s regulatory classification as a security instead of a commodity.

In a parallel development, Hong Kong regulators are reportedly contemplating allowing staking for spot Ether ETFs, which began trading on April 30, 2024, alongside spot Bitcoin ETFs. This contrasts with the U.S. market, where spot Bitcoin ETFs debuted in January 2024, but spot Ether ETFs have not yet been approved.

The call for Ether ETFs has highlighted the growing role of digital assets in the investment landscape. Lawmakers and industry analysts alike are keen to see how the SEC will handle these new applications, given the potential for broader market implications.

The initiative from U.S. lawmakers underscores a broader trend toward integrating cryptocurrency into traditional financial markets, emphasizing the need for robust regulatory frameworks to protect investors. This development could represent a significant step toward mainstream acceptance and stability for crypto assets.

As the cryptocurrency market evolves, the ongoing dialogue between lawmakers, regulators, and industry players will be crucial in shaping its future trajectory. The decisions made in the coming months could significantly influence the accessibility and security of digital asset investments.