Jake Chervinsky, crypto lawyer serving as chief legal officer for blockchain venture capital firm Variant Fund, says he is a lot less confident about the potential approval of a spot Ethereum exchange-traded fund (ETF) because of the United States Securities and Exchange Commission’s (SEC) against cryptocurrencies.
Less Confidence in Ethereum ETF Approval
According to Chervinsky’s tweet, the SEC received “a ton of political blowback” for approving spot Bitcoin ETFs in January, even though a court order had forced the agency to make the decision.
The court order was the outcome of a lawsuit against the SEC brought by asset management firm Grayscale after the Commission denied its application to convert a Bitcoin fund into a spot ETF. After more than a year of litigation, a federal appeals court ordered the SEC to reevaluate Grayscale’s application. This decision drove the approval of ten spot Bitcoin ETFs, including Grayscale’s GBTC, in January.
Following the spot ETF approvals and launch, the bulls have taken over the market, with bitcoin’s (BTC) price jumping more than 45%. There is strong BTC demand from U.S. investors, and the ETFs are breaking their trading volume records daily.
Chervinsky believes approving a spot Ethereum ETF would only add to the frenzy and propel the market further.
“Now animal spirits are in control of the market, and an ETH ETF would only add to that,” he said.
BlackRock’s Presence Unlikely to Spur Approval
The legal expert explained that the SEC has a legal argument that may be wrong but “passes the laugh test” by a margin enough to justify a denial of several pending applications for spot Ethereum ETFs, “and we know the SEC is willing to take wrong legal positions in court to satisfy political priorities,” he added.
The applicants include the world’s largest asset manager BlackRock, Invesco/Galaxy Digital, VanEck, Fidelity, Hashdex, and Ark Invest/21Shares. The SEC has moved the deadline for deciding on the applications to May.
Almost all the applicants for spot Ethereum ETFs are among the issuers of the spot Bitcoin ETFs; hence, the crypto community believes the presence of these firms, especially BlackRock, would spur the SEC to greenlight the new products.
However, Chervinsky insists BlackRock’s remarkable ETF approval record is a result of a collaborative relationship with the SEC, and the firm will withdraw its Ethereum ETF application if the agency says so.
