New crypto ETF applications are now being considered for approval in the US. After the approval of the one dedicated to Bitcoin, there are now many other projects that are champing at the bit. However, the situation, at least in the USA, is very different from that in Europe, a continent where products containing so-called altcoins have long been listed.
Will there be other crypto ETFs in the States? And under what conditions? Who is ahead of the rest? Will they stop at Bitcoin? Will they include Ethereum? These are all legitimate questions, to which we will try to give a meaningful answer, taking into account what really matters.
Ethereum certainly starts in pole position: there are already several approval requests that will soon see their first deadlines. But what about the others?
Crypto ETFs In The USA: The Current Situation
It's okay for the Bitcoin Spot ETF, but now others are champing at the bit, including managers and projects to be included in financial products that can be traded on regulated stock exchanges.
Ethereum has already been included in approval requests. Eric Balchunas, a Bloomberg ETF analyst with a strong track record in predicting Bitcoin ETF approvals, estimates a 70% likelihood of Ethereum ETFs getting the green light. While this probability is slightly lower than the 90% he had assigned to Bitcoin ETFs, it still signals a significant possibility for Ethereum's entry into the regulated ETF market.
We believe two main issues will influence giants like major asset managers to launch crypto ETFs: sufficient investor demand and trading volume, along with a clear regulatory framework that avoids concerns about unreliable markets, investor protection, and potential money laundering. Ethereum, with its established ecosystem and high trading activity, certainly ticks the first box, and several single-asset and multi-asset Ethereum ETF applications are already under review.
The second criterion, ensuring compliance with US regulations related to unregistered securities, requires a deeper look, which we'll briefly explore for those who haven't followed the developments closely.
• Investment Contracts in the USA
Anything deemed to be an investment contract in the US must be registered with the SEC. To determine whether an asset is an investment contract, it must meet the criteria set by the Howey Test: it must involve an investment of money, with the expectation of profit depending on the efforts of others. It is perhaps a somewhat bizarre definition; the fact is that, according to the SEC's Gary Gensler, many cryptocurrencies are considered investment contracts, and almost none of them are registered. For this reason, directly or indirectly, he has taken legal action against them.
• The situation today on crypto/security
In this table we summarize the current situation:
|
CRYPTO
|
SECURITY | DETAILS |
| Ethereum | ? | Never cited by SEC as an unregistered security. Gensler never responded |
| BNB | ✅ | Cited in Sec v. Binance |
| SOLANA | ✅ | Cited in Sec v. Binance |
| XRP | ✅ | Case still open see Sec |
| CARDANO | ✅ | Cited in Sec v. Binance / Coinbase |
| AVALANCHE | ❌ | |
| DOGECOIN | ❌ | |
| POLKADOT | ❌ | Polkadot has been attempting to engage with the SEC for months but has not received any clarification. |
| TRON | ✅ | Cited in Sec v. Justin Sun |
| MATIC | ✅ | Cited in Sec v. Binance / Coinbase |
The summary
The question mark on Ethereum is a must because, although it has never been included in SEC lawsuits, Gensler has always refused to discuss it in these terms in public.
However, there is a positive aspect regarding Ethereum: BlackRock and others have already applied for approval, likely convinced that they can overcome this problem or that the SEC will not oppose it, considering it an unregistered security.
• The Staking Problem
There is an additional problem. The SEC has taken a rather aggressive stance towards staking, particularly when offered by intermediaries. Coinbase is currently facing a lawsuit on this matter, while Kraken resolved one by paying a fine. Does this problem also impact the quality of the asset? For now, it seems not, but, in our opinion, it is an additional consideration to be taken into account.
And the others?
Avalanche, Polkadot, and Dogecoin, currently unregistered with the SEC, may encounter a faster approval process for ETFs compared to those facing scrutiny. However, their ability to generate enough profits for asset managers remains uncertain.
Based on market data and current regulatory trends, we believe Ethereum is the most likely candidate to pioneer the US ETF market (it's already available in Europe!). Until the SEC clarifies its stance on unregistered securities and staking, considering other crypto ETFs for the US market might be premature.
Trending News:
• Bitcoin Sideways After ETF Launch: A Mixed Bag of Technical Signals
• Tiny titan: World's first graphene chip paves the way for smaller, faster everything
