After the SEC’s spot Bitcoin ETF approval, all eyes shifted to the possible approval of Ethereum ETF products. Although there are applications, there is no green light yet. Valkyrie Chief Investment Officer Steven McClurg doesn’t predict a spot Ethereum ETF coming anytime soon. But he says it will get approval within the next year or two.
Ethereum ETF product not coming soon, but…
Major firms such as Fidelity and BlackRock have filed for a spot Ethereum ETF in the last few months. Some analysts predict that the Securities and Exchange Commission (SEC) will approve these products as early as May of this year. Meanwhile, Valkyrie is not currently competing for a spot Ethereum ETF.
cryptokoin.comAs you follow from, the SEC approved the first spot Bitcoin ETFs in the US last month. The funds have generated billions of dollars since then. After this, as the crypto industry started to rise, Ethereum ETF expectations emerged. McClurg says in an interview that a spot Ethereum ETF will not be coming anytime soon. But he notes that it’s likely to arrive within the next year or two. In this context, McClurg makes the following statement:
A lot of work has gone into the launch of spot Bitcoin on behalf of issuers as well as regulators and the SEC. This is a new asset class, so there is a lot to learn. There are many differences between Bitcoin and Ethereum. So I think it’s going to take a lot of time for the SEC to figure out what disclosures look like for a product like this. So it may take another year just to figure out the explanation aspect.
“Ethereum has different aspects!”
Some of the applications for the Spot Ethereum ETF include a staking component, which McClurg said could add another layer. “It would be very difficult to stake ETH without seeing this as a security feature,” says McClurg.
S&P Global Ratings analysts said in their latest report that staking could increase Ethereum’s concentration risk. Ark Invest and Franklin Templeton announced that they aim to earn additional returns by staking the underlying ETH.
A potential XRP ETF?
McClurg also talked about a spot XRP ETF, given its run in the courts. Ripple, the company behind XRP, was sued by the SEC in 2020 and accused of illegally raising money through an unregistered XRP offering. Over the summer, a judge’s decision unraveled the legality of Ripple’s XRP sales. While some did not violate securities laws due to a blind bidding process in place for them, other direct sales of the token to institutional investors were classified as securities.
McClurg said that Bitcoin, Ethereum and XRP have been recognized by the SEC or through the courts as not securities. SEC Chairman Gary Gensler did not directly say whether the entity would have to comply with securities laws. Therefore, whether Ethereum is a security remains a matter of debate. McClurg shares his assessment:
That’s why it’s in the back of our minds. I think there are a few more that might not be considered securities that could then be held in an ETF. But we’ll see what happens next year.
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