KEY POINTS
- Kaiko's Will Cai said he expects the approvals to have 'likely positive ramifications' on crypto regulation
- Gensler has repeatedly refused to directly answer questions on whether Ether is a security or not
- Kaiko analysts are expecting an Ether bull run after ETH ETFs begin trading
The U.S. Securities and Exchange Commission (SEC) has now indirectly declared that Ether (ETH), the native digital asset of the Ethereum blockchain, is a commodity following the much-awaited 19b-4 filing approvals last week, a financial expert said.
Will Cai, Head of Indices at crypto data solutions firm Kaiko Data, said in a Monday report by the Kaiko Research Team, that the Wall Street regulator's latest move has indirectly made it answer – though indirectly – a question it has dodged multiple times in the past years: is Ether a commodity or a security?
"With these approvals, the SEC implicitly stated that ETH (without staking) is a commodity rather than a security," he said. He further noted that the approvals will surely have "likely positive ramifications" on how other similar digital assets will be regulated in the country "with respect to trading, custody, transfer, etc."
Ahead of last week's approval, SEC Chair Gary Gensler refused to answer CNBC Squawk Box host Andrew Ross Sorkin when the latter directly asked whether the Ethereum token was a commodity or a security.
It wasn't the first time Gensler did not answer the main question on the world's second-largest cryptocurrency by market value. In April last year, the SEC chair was asked by a lawmaker during a Congress hearing regarding the financial regulator's designation of Ether, to which he also refused to provide a direct answer.
After tech firm Consensys revealed in a legal filing that the SEC had deemed ETH a security since last year, crypto users have demanded that the regulatory agency and Gensler be held accountable for their "misleading" statements regarding the digital currency. The U.S. House of Representatives' Financial Services Committee joined the community call-out, saying, "classifying #ETH as a security contradicts previous statements of the SEC and Chair Gensler."
Following last week's approval, it appears the SEC now has an answer, even as it has yet to officially approve the S-1 filings of spot Ether ETF issuers.
Kaiko analysts are expecting an Ethereum bull run now that it has its own ETFs. The funds won't launch until S-1 filings are approved, but once they do, Kaiko researchers believe "it is reasonable" for the digital asset to also see an upward trend after the funds start trading.
"Overall, even if inflows disappoint in the short term the approval has important implications for ETH as an asset, removing some of the regulatory uncertainty which has weighed on ETH's performance over the past year," the analysts said.
