Ethereum Spot ETF Receives Partial Approval, Potential to be Considered a “Commodity”
In the early hours of May 24th, the U.S. Securities and Exchange Commission (SEC) officially approved Form 19b-4 (Exchange Rule Change) for eight Ethereum spot ETFs, including BlackRock, Fidelity, and Grayscale. According to a report by Wall Street investment bank Bernstein, the approval of Ethereum spot ETFs in the United States will demonstrate a relatively relaxed regulatory environment for the cryptocurrency industry, thereby increasing the likelihood of classifying Ethereum competitor “Solana” as a “commodity.”
Cryptocurrencies are classified as securities or commodities, each with different implications. If a cryptocurrency is classified as a commodity, the application and approval process for ETFs is relatively easy because commodities are regulated by the Commodity Futures Trading Commission (CFTC), which usually has looser regulatory requirements than the SEC. If classified as a security, strict SEC regulatory rules must be followed, including more detailed information reporting requirements and comprehensive compliance plans.
The approval of Ethereum spot ETFs by the SEC most likely means that the SEC will consider Ethereum as a commodity rather than a security. This determination could impact other digital assets, including Solana.
Further reading:
Crypto Milestone of the Year: SEC “Partially Approves” Ethereum Spot ETF, What Does It Mean?
In the Changing U.S. Regulatory Environment, Will a Solana ETF Be Created?
Brian Kelly, CEO of digital asset investment firm BKCM, recently speculated in an interview with CNBC that Solana could be the next altcoin (referring to all cryptocurrencies other than Bitcoin) to receive ETF approval.
Kelly emphasized that Bitcoin, Ethereum, and Solana are the “big three” digital assets, and it is possible to see related ETF products approved during this cycle. He pointed out that Bitcoin ETFs have already attracted many investors, with a total market value of approximately $58 billion, demonstrating strong demand for this type of ETF.
Although Solana has been strongly labeled as a “security” by the SEC, CryptoSlate points out that regulatory and political environments are subject to change, which may increase the chances of Solana ETF approval, especially after Ethereum ETFs are also approved.
In a letter on May 22nd, bipartisan groups in the United States suggested that the SEC approve Ethereum spot ETFs, seemingly indicating a gradual softening of the government’s attitude towards cryptocurrencies. This could also be a key factor in the future birth of Solana ETFs.
In addition, the U.S. House of Representatives recently passed the Financial Innovation and Technology Act of the 21st Century (FIT21), which provides a clear framework for the classification of digital assets and distinguishes between commodities and securities. This reduces regulatory uncertainty and promotes innovation and development by identifying which digital assets are regulated by the CFTC and which are regulated by the SEC.
However, currently, the FIT21 bill has only passed the House of Representatives vote and will take some time to be reviewed by the Senate. It will undergo many amendments and adjustments, and there are also many opposing voices. Therefore, it is still uncertain how it will ultimately turn out.
The approval of Ethereum spot ETFs has brought an optimistic atmosphere to the entire cryptocurrency industry. If a Solana ETF is submitted and approved in the future, it may symbolize the formal entry of cryptocurrencies into the mainstream market and indicate that the government and regulatory agencies are more actively supporting financial innovation related to cryptocurrencies.