Crypto: SEC May Approve Ether ETFs to Avoid Legal Showdown

Contrary to rumors suggesting a politically motivated decision by the SEC to approve spot Ether ETFs, Bernstein analysts believe that the regulator acted instead to avoid potential legal litigation. This decision seems to give a major boost to the crypto industry.

A decision based on legal considerations rather than political ones

Analysts Gautam Chhugani and Mahika Sapra of Bernstein challenge the theory of a political maneuver by the Democrats behind the SEC’s approval of Ethereum ETFs ahead of the midterm elections.

According to their report, the SEC knew it couldn’t reject the Ether ETF applications given the similar regulatory structure to the previously approved Bitcoin ETFs.

With Ether futures products listed and a close correlation between spot and derivative markets, rejecting the Ether ETFs would have exposed the SEC to potentially unfavorable litigation. The presidential veto on the repeal of a key accounting bulletin by the authority supports this hypothesis of a purely regulatory decision.

“The SEC no doubt adopted a pragmatic approach to avoid a judicial clash,” the analysts conclude, pointing out the candidates’ own surprise at the unexpected green light.

A major development despite timid beginnings

While Bernstein welcomes this major advancement for the crypto industry, the firm tempers initial expectations. Compared to the highly popular Bitcoin ETFs, the new index products on Ether are expected to attract less capital at first.

However, analysts foresee “pent-up demand from the same institutional investors” and an appreciation in the price of Ether before its actual launch. A positive outlook that confirms the importance of this milestone for the sector.

The final step will be the SEC’s approval of the registration statements filed by issuers such as VanEck, BlackRock or Fidelity.