The U.S. Securities and Exchange Commission's (SEC) decision to approve spot exchange-traded funds (ETFs) on Ethereum was probably not a last-minute decision driven by political pressure, according to analysts at research and brokerage firm Bernstein.
The theory of political motivation challenged
One of the main theories behind the SEC's sudden change of tone towards spot Ether ETFs in May was increased political pressure from Democrats to appeal to undecided voters in the run-up to the US elections in November. However, this scenario seems less credible after President Joe Biden vetoed the bill repealing SEC Accounting Bulletin No. 121 (SAB 121).
A pragmatic decision by the SEC
Bernstein analysts said that “the SEC knew it was cornered on the ETH ETF” as it shared the same regulatory framework as Bitcoin spot ETFs, including the same correlation between spot and futures and several live Ether futures products on the Chicago Mercantile Exchange, which implied Ether's commodity status. “It is likely that the SEC took a more pragmatic approach and avoided a legal conflict,” they added.
Implications for the future
Although most analysts expect Ether spot ETF flows to be well below those of Bitcoin, there “should be pent-up demand from the same participants as for the Bitcoin ETF”. The company expects Ether to experience positive price development in the run-up to launch.
