Some experts believe the SEC will continue to go after staked service operators

Cinneamhain Ventures: The approval of ETH ETFs will allow other altcoins to be excluded from the securities category

24.05.2024 - 08:30


3 min

What’s new? The US Securities and Exchange Commission (SEC) has approved part of the documents needed to launch Ethereum-based spot exchange-traded funds (ETFs). According to some industry experts, this could mean that the regulator will not include many other altcoins in the securities category. At the same time, the commission will still be able to take action against staking service providers, industry participants said.

Material by Cointelegraph

What else is known? The SEC has approved Form 19b-4 trading rule change filings from the NASDAQ, NYSE, and CME stock exchanges where investment firms plan to list their spot ETH ETFs. However, issuers must also obtain approval of S-1 filings to register new securities (fund shares) before trading can begin. According to Bloomberg analyst James Seyffart, the review of these documents could take two weeks or more.

In the Bankless podcast, Seyffart noted that this case involves shares of a commodity-based trust, and in the event of S-1 approval, the SEC will make it clear that it does not categorize the underlying asset (Ethereum) as a security.

Digital asset lawyer Justin Browder is of a similar opinion. He noted that an S-1 approval would put an end to the debate over the status of the asset.

Adam Cochran, a partner at venture capital firm Cinneamhain Ventures, argued that this approach could extend to other cryptocurrencies:

“ETH is a commodity, even with its current attributes. That means we can extrapolate to *A LOT* of other projects what elements matter in security. Today a lot of things probably clearly became commodities, even if they don’t know it yet.”

However, Seyffart believes the SEC could continue to put pressure on industry participants offering staking services. In his opinion, the regulator could argue that ETH itself is not a security, but blockchain-backed ETH already falls into that category.

ConsenSys challenges the SEC’s classification of ETH as a security

ConsenSys challenges the SEC’s classification of ETH as a security

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Digital asset lawyer Joe Carlasare also believes that the SEC will likely continue to go after staking service providers even after the approval of spot ETH ETFs.

The SEC approved 19b-4 filings from BlackRock, Fidelity, Grayscale, Franklin Templeton, ARK Invest and 21Shares, Invesco and Galaxy, and Bitwise. Many issuers removed the staking provision from their filings.

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