Bloomberg ETF analyst James Seyffart believes the approval of spot Ethereum ETFs was likely influenced by political decisions rather than purely financial considerations.
In an interview with Cryptonews’ Rachel Wolfson at Consensus 2024, Seyffart discussed the timeline and approval process for spot ETH ETFs, including the 19b-4 rule change and the role of the SEC.
Seyffart suggested that the political climate, including actions by the Biden administration and responses from the crypto community, played a significant role for the approval to go through.
On May 23, the SEC officially approved 19b-4 applications from VanEck, BlackRock, Fidelity, Grayscale, Franklin Templeton, ARK 21Shares, Invesco Galaxy, and Bitwise for issuing spot Ether ETFs.
“We think this was a complete political decision. We think it was a 180 from the SEC,� he said.
@EricBalchunas and I cant see it on the front facing website yet but Phoenix is always right in my experience. https://t.co/xI37RVXqRo
— James Seyffart (@JSeyff) May 23, 2024
SEC Didn’t Plan to Approve Spot ETH ETFs
Initially, there were low expectations for approval due to SEC hostility and lack of communication, Seyffart said during the interview.
He added that the approval was seen as a deviation from the SEC’s usual stance, indicating a potential shift influenced by political pressures.
“I think the SEC, until the week before, was planning to deny the Ethereum ETFs,� he said.
“There’s no smoking gun that says like this is exactly what happened… but that’s all the signs are pointing. There’s a lot of circumstantial evidence.�
He also noted that the decision’s timing aligns with significant political events, such as Trump’s pro-crypto stance and bipartisan support for crypto-friendly legislation.
Seyffart and his boss, Eric Balchunas, gained prominence in the ETF space, particularly for their analysis of Bitcoin and Ethereum ETFs.
The approval process for ETFs involves multiple steps, including a 19b-4 approval and the prospectus (S1) review, which can take months.
Both Balchunas and Seyffart increased the likelihood of spot ETH ETF approval to 75%, up from the previous estimation of 25%, especially with the final deadline for 19b-4 forms passing last week.
A quick note, @EricBalchunas and increased odds to 75% for spot #Ethereum ETF approvals. But that’s for the 19b-4 May 23rd deadline (@vaneck_us‘s deadline) We also need S-1 approvals. It could be weeks to months before we see S-1 approvals and thus a live Eth ETF h/t @NateGeraci
— James Seyffart (@JSeyff) May 20, 2024
During the interview, Seyffart predicted that the Ethereum ETFs might launch within weeks, despite the arduous approval process.
“So usually that process we’ve seen it take up to five months that’s on the long end. More standard is 3 to 4 months,� he said.
“We are expecting this to be more expedited obviously, especially if this is political.�
Other Crypto ETFs Not Likely Says James Seyffart
Beyond Bitcoin and Ethereum, the approval of other crypto ETFs, including Solana, is unlikely without significant regulatory changes, Seyffart said.
He noted that a regulated market is needed to monitor these assets for fraud and manipulation.
In contrast, crypto investor and trader Brian Kelly has suggested that Solana could potentially become the next cryptocurrency to have a spot ETF in the United States.
In a recent episode of CNBC’s ‘Fast Money’, Kelly, who is also the founder and CEO of the BKCM Digital Asset Fund, posed the question, “The trade now is, who’s next?�
He then suggested, “You’ve got to think about Solana as probably the next one. Bitcoin, Ethereum, and Solana are probably the big three for this cycle.�
Consensus 2024
Cryptonews reporters Rachel Wolfson and Matt Zahab are on the ground at Consensus 2024. Taking interviews from industry leaders and pioneers as well as prominent analysts like James Seyffart, they bring you the latest updates from one of the biggest crypto events globally.
You can check out Rachel Wolfson’s full interview with James Seyffart below:
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