Spot Ethereum ETF Decision Approved Is Not By SEC Chair

Key Points:

• The SEC’s Division of Trading and Markets approved spot Ethereum ETFs for several major financial firms.
• Bloomberg ETF analyst James Seyffart noted that the spot Ethereum ETF decision using delegated authority is standard practice.

The Securities and Exchange Commission’s (SEC) Division of Trading and Markets has approved a series of spot Ethereum exchange-traded funds (ETFs) from prominent financial firms, including BlackRock, Fidelity, Grayscale, Bitwise, VanEck, Ark, Invesco Galaxy, and Franklin Templeton.

Spot Ethereum ETF Decision Made Using Delegated Authority

The spot Ethereum ETF decision, outlined in an order approving 19b-4 forms, was made by the division rather than the SEC’s commissioners.

The order clarifies that the approval was granted “by the Division of Trading and Markets, pursuant to delegated authority,” indicating that SEC Chair Gary Gensler and the four other commissioners did not directly vote on this matter. Bloomberg ETF analyst James Seyffart noted that using delegated authority for such spot Ethereum ETF decisions is standard practice, explaining that requiring a formal vote for every decision would be impractical.

This procedural approach contrasts with the approval process for spot Bitcoin ETFs earlier this year, which involved a formal vote by the commissioners. In that instance, Gensler and Republican Commissioners Hester Peirce and Mark Uyeda voted in favor, while Democratic Commissioners Jaime Lizárraga and Caroline Crenshaw opposed. The SEC has stated it will not comment further on the Ethereum ETFs beyond the issued order.

Regulatory Uncertainty Surrounds Ether’s Classification as a Security

The approval of these ETFs may have broader policy implications. SEC Chair Gensler has not clearly defined whether Ether is a security, raising concerns among crypto enthusiasts about the regulatory future for Ethereum and related projects. A critical issue is staking, which involves earning rewards for participating in network validation and has led to debates about Ether’s classification as a security. Last year, the SEC accused Coinbase of violating securities laws by offering staking services.

In contrast, the Commodity Futures Trading Commission (CFTC), which oversees derivatives, does not view Ether as a security and has permitted trading in Ether futures by CME Group for several years.