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SEC Chairman Gensler Comments on Bitcoin and Ethereum; Avoids Ethereum Security Classification

SEC Chairman Gary Gensler chose not to disclose whether the U.S. Securities and Exchange Commission classifies Ethereum as a security or a commodity on March 6–a decision eagerly anticipated by the market in light of its potential impact on the approval of Ethereum ETFs.

The SEC chair was a guest on Bloomberg TV, where he discussed the turmoil at the NYCB, gas emissions, and cryptocurrencies.

Is Ethereum a Security or a Commodity?

Speaking to the TV hosts, Gary Gensler deferred on how the regulator views Ethereum, even though the market expects the agency to approve a spot ETH ETF following the approval of Bitcoin funds in January.

So far, the agency has delayed its decision to approve or reject any of the Ether ETF applications. This includes applications from major firms such as BlackRock, Galaxy, and Fidelity

Although Gensler didn’t reveal the SEC’s stance on Ether, he commented on the speculative nature of cryptocurrencies, likening their volatility to roller coaster rides.

He expressed concerns about the volatile nature of cryptocurrencies like Bitcoin and Ethereum and advised investors to be cautious when transacting with them.

“One could just look at the volatility of Bitcoin in the last few days. I grew up loving roller coasters,” he explained. “Maybe in my adult years, I don’t ride them as much. But you really should be conscious as the investing public that this is a bit of a roller coaster ride on these volatile assets.”

Despite the agency’s current stance on Ether remaining undisclosed, many in the cryptocurrency sector argue that Ether should be classified as a commodity rather than a security.

Global regulators like the U.S. Commodity Futures Trading Commission and the UK Financial Conduct Authority (FCA) already regard Ether as a commodity. Additionally, the approval of Ethereum Futures ETFs last year further supports this classification.

According to Bloomberg’s ETF analyst James Seyffart, the SEC “implicitly” accepted Ether as a commodity when it green-lit the futures ETFs. He also argued that the SEC didn’t object to ETH being categorized as a commodity when registered with the CFTC. The first ETH futures ETF was listed for trading on October 2.

Here we go … expect more spot #ethereum ETFs filings in the coming days.

NOTE: this is an S-1 and not a 19b-4. Which means it does not start a clock in any way … yet. Expect 19b-4’s soon.

— James Seyffart (@JSeyff) September 6, 2023

Multiple Ethereum ETF Delays Expected

The SEC’s delay in responding to Ether ETF applications does not surprise many market commentators.

The agency can delay its decision up to three times before making a final decision.

Seyffart declared that May 23, 2024, was the key date that could seal Ethereum ETFs’ fate. This is the deadline for the SEC to grant a response on VanEck’s spot ETH ETF application.

Despite the excitement about the VanEck deadline date, however, subdued opinions suggest a spot Ether ETF won’t be as significant as the Bitcoin ETFs. Bloomberg ETF analyst Eric Blachunas believes the spot ETH ETF will be “small potatoes” compared to the trading volumes of Bitcoin ETF.

Since their approval, Bitcoin ETFs have consistently achieved one milestone after another.

Earlier this week, the ten-spot Bitcoin ETFs surpassed their previous trading volume by processing $10B in transaction volume. The high demand for these funds and the approaching Bitcoin halving are major catalysts that could increase the price further.

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