11 key days are coming for the future of Ethereum

Ethereum Capitalization
Key facts:
  • The SEC has until May 23 to make a decision on ether ETFs.
  • There are varied expectations about what the stock market regulator’s final verdict will be.

Some companies applying for spot ETFs for ether (ETH), Ethereum’s native cryptocurrency, are making changes to their proposals. This occurs just 11 days before the United States Securities and Exchange Commission (SEC) defines whether or not to approve these ETFs, which would determine the future of the digital asset in traditional markets.

Among these companies is ARK Invest, which eliminated the figure of staking with ETH from its proposal, according to what is indicated in a document submitted to the regulatory agency.

ARK Invest introduced staking in its authorization application last February. There it stated that “the sponsor may, from time to time, implement staking in a portion of the trust assets through one or more trusted staking providers.”

This is not the only company that aspires to have an ether ETF that also includes staking in its initiative. Fund managers such as Fidelity and Franklin Templeton also did so, but have not made changes in that regard so far.

Staking involves leaving cryptocurrencies (in this case ETH) deposited in a smart contract to earn profits. The participation of companies of such magnitude in ETH staking could have a significant impact on the Ethereum ecosystem.

Will Ethereum ETFs be approved in the United States or not?

What was done by ARK Invest is seen by Eric Balchunas, ETF specialist at Bloomberg Intelligence, as an indication that the company is adjusting to the SEC’s comments, which he considers would be “good news.” However, he assures that there has been no observation by the SEC in this regard.

On the other hand, he mentions that this could be a move in order to give the SEC “one less thing to use in its rejection.” He is not so sure about the latter. For several weeks, Balchunas has maintained the thesis that the probability of ether ETFs being approved is low, as reported by Market Times.

Fox Business journalist Eleanor Terret mentioned that it would be interesting if other companies followed in ARK Invest’s footsteps and wonders if such a move could be “attractive” to the SEC. Like Balchunas, Terret has not been optimistic about ETH-based funds, as the SEC was not involved in the meaningful way it did with bitcoin ETFs.

What happened with the fund proposed by ARK Invest also caught the attention of Nate Geraci, president of ETF Store and specialist in exchange-traded funds. The specialist revealed that he had a conversation with Matthew Sigel, head of digital asset research at VanEck, who is also not optimistic about the approval of ETH funds. “I spoke to Rich Kerr, a partner at the law firm K&L Gates and he also says that [the ETFs] are likely to be rejected.”

Among the reasons for the rejection of ETFs, the possible classification that the SEC could make of ether and classify it as a security or security stands out, according to Geraci.

Another company that also made a move, although more radical, was the asset manager Grayscale. Last week she withdrew her proposal for a fund based on ether futures. This raised a series of comments that claimed that the decision had a background that sought a judicial confrontation with the SEC.

However, Grayscale CEO Michael Sonnenshein clarified that they put that project aside to focus on converting their ETH trust into a spot ETF. “At Grayscale we decided to focus our energy on our spot products. That is really fundamental to our DNA,” he commented.ADVERTISING

Ether funds could arrive in several years

While there is little optimism among specialists, not all seems lost for ether ETFs. Steven McClurg, chief investment officer at Valkyrie, doesn’t think ETFs will be approved next week, but sees them more likely to be approved in at least a year or two.

For his part, Nikolaos Panigirtzoglou, global markets strategy manager at JP Morgan, also does not believe that the financial instrument will be approved this month. Furthermore, he does not believe that the rejection of the ether ETF is “a big disappointment” as the market does not seem to be expecting a positive response from the regulator.

So far the price of ETH so far in May has lateralized between $2,800 and $3,200, as seen in the following TradingView chart. Apparently, the apathy of the ETFs has infected the price of the cryptocurrency, as Panigirtzoglou says.

ETH price. Source: TradingView.

This market scenario could change as Thursday, May 23, approaches, the date on which the SEC must give its verdict on the ether ETF proposed by the VanEck company, since, given the uncertainty, days of uncertainty can be anticipated. great volatility for the cryptocurrency market.

It must be taken into account that the SEC usually takes until the last possible day to announce its decisions. At least, that’s what it did with the bitcoin ETFs that ended up being approved on the deadline, in January 2024.