Forbes: Why the ETH ETF Might Be Delayed?

Original title: WhyAnETHETFMightBeDelayedAfterAll

##Original author: SeanSteinSmith

Original compilation: Yvonne, Mars Finance

Given that most crypto assets have achieved breakthrough development this year, we There are reasons to believe that the cryptocurrency market will further mature. No matter which aspect of the cryptocurrency industry you look at, 2024 is going to be the year that prices rebound and confidence among institutional and retail investors returns. Rising market sentiment has boosted public opinion around the possibility of ETH ETF approval. After all, after years of rejections from various institutions, there are currently 11 Bitcoin ETFs trading in the United States. While flows may have slowed, the slowdown comes after a hot start that quickly propelled Bitcoin into the ranks of the world’s largest ETF-based assets.

ETH remains the second largest cryptocurrency in the world and the most important blockchain token in the cryptocurrency market, and the time for an ETF seems to have arrived. Price volatility aside, the legitimacy created by a Bitcoin ETF in the TradFi space is significant; after years of ignoring this asset class, billions of dollars in allocations and investments in 2024 cannot be ignored. El Salvador, a long-time buyer of Bitcoin, has moved the majority of its Bitcoin holdings into a cold wallet, where they are kept in a secure location within sovereign territory. Given all these positive developments, the likelihood of ETHETF’s approval seems high. Now, however, let's take an objective look at the reasons for caution about this optimism.

SEC

Anti-crypto views, led by Chairman Gary Gensler, appear to have dominated the committee’s conversations, with one recent example being evidence that several U.S. companies are accepting offers regarding deals with the Ethereum Foundation investigation. These recent investigations follow a statement from the U.S. Securities and Exchange Commission that proof-of-stake blockchains (and related tokens) can be classified as investment contracts, as well as lawsuits against exchanges such as Coinbase and Kraken, which The focus is on stake-as-a-service provided to investors.

By focusing on the Ethereum Foundation, the SEC does have some information that it can use to build a case for classifying Ethereum as a security. The foundation has issued tokens to fund further development, some tokens have been allocated to founders, and the work carried out by the foundation is related to increasing the value of said tokens. Unlike Bitcoin, there is a founding/management team involved in Ethereum. Promotion and further development of Fang blockchain. Regardless of the opposition the SEC continues to face and the problems that may arise from unilateral action, the Commission appears set to continue these efforts.

Collateralized ETH vs. Uncollateralized ETH

While the staking services provided by some exchanges did lead to lawsuits and provided evidence to the U.S. Securities and Exchange Commission regarding Adding fuel to the fire is the case that ETH should be classified as a security, but this could also be a factor reducing the appeal of spot ETHETFs. With the average return on Ethereum being just under 4%, this opportunity is attractive to retail investors, but it will be even more compelling for institutional pools that must manage the stable returns that investors are used to. With inflation still higher than pre-2020 levels, the yield generated by ETH will continue to attract attention.

On the other hand, the appeal of this yield, and staking in general, is what the SEC used to frame its recent effort to classify ETH as a security One of the core arguments. Since ETH staking involves centralization (whether through a centralized exchange or a decentralized protocol), a concerted pursuit of profit, and limited direct involvement from most staking participants, this argument is not entirely unreasonable.

ETH’s continued development to attract investors could also become another obstacle to spot ETF approval.

The success of Bitcoin ETFs is a dilemma

Finally, the success of multiple spot Bitcoin ETFs once again triggered US policy A storm of criticism and counterattack from the framers. New efforts to crack down on the energy consumption of Bitcoin miners, the possibility of reimposing a 30% target tax on said miners, and concerns about price volatility continue to fuel public debate and undermine demand for more crypto ETFs.

These positive trends come as cryptocurrency investors and advocates cheer for higher prices, growing traffic and volume, and more users joining the space But it was used to oppose further development.

The cryptocurrency industry has a lot to celebrate in 2024, but these same successes may actually prevent more positive news.

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