Coinbase analyst considers that the market “underestimates” possible approval of Ethereum ETFs – DiarioBitcoin

The analyst of Coinbase details that the probabilities for the possible approval of an ETF Ethereum cash are not as low as many believe. It may happen that applications are rejected in this first batch, but it does not mean that they will not arrive later this year.

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• An analyst of Coinbase considers that the approval of ETFs may be underestimating Ethereum
• Chances of approval are low for this first batch of applications, but there may be success
• In case they are rejected, the analyst does not doubt that the ETFs Ethereum if they will reach the US market
• The posture of the SEC and the doubts surrounding the process generate more doubts than certainties in this case

David Han, analyst Coinbase, recently spoke about expectations surrounding exchange-traded funds (ETFs) based on Ethereum in cash, stating that the sector could be underestimating the chances of this becoming a reality amid the feeling that they will face an eventual rejection in this round by the US Securities and Exchange Commission (SEC).

Underestimating ETFs Ethereum

Han’s reading came to fruition in a monthly report featured on the Coinbase, where the analyst develops in detail the idea about the benefits that the market would experience upon the arrival of ETFs Ethereum in cash, and although it is not entirely clear if this first batch of applications will be accepted at the end of the month, there is no doubt that funds based on the digital currency will eventually reach the North American market.

In this regard, Han writes that “While there is uncertainty surrounding timely approval given the apparent silence of the SEC with issuers, we believe the existence of a spot ETH ETF in the US remains a question of when, not if.” He adds that these products follow the same path and rationale applied to funds based on Bitcoin, Therefore, the constant supervision that the administrators would exercise would dispel doubts about possible market manipulations that the company would allege. SEC as a possible obstacle.

Although this point seems to be clearer, where Han perceives the most doubts is around the classification that applies to Ethereum due to its operational differences with Bitcoin. Here it points out that as it is a network that bases its operation on a consensus algorithm Proof-of-Stake (PoS) may propose a different scenario in regulatory matters, but defends that the perspective should not be so negative as to think that an ETF based on the digital currency will not arrive, although it will not be in this batch.

In this regard it reads:

As there is still no clear regulatory guidance on the treatment of asset staking, we believe that spot ETH ETFs that allow staking are unlikely to be approved in the near term. The complexities of drawdown conditions, differences between validating clients, potentially obscure fee structures of third-party staking providers, and uncommitted liquidity risks (and output queue congestion) are significantly different from bitcoin. That said, in our opinion, this should not affect the status of ETH without staking.

Regarding the chances of approval, Han assures that they are closer to 30-40% at this time, doubting that the SEC “is willing to provide the political capital necessary to support a denial (of this product)”in light of the upcoming presidential elections:

“Even if the first deadline of May 23, 2024 is rejected, we believe there is a high probability that litigation could reverse that decision”Han alleged, pointing out that not all applications for a spot Ethereum ETF should be approved at the same time, as this was done with funds based on Bitcoin to guarantee equal opportunities by everyone arriving at the market on the same day.

Panorama remains diffuse for Ethereum ETF

As we indicated in previous editions, although many managers considered that ETFs Ethereum They are the natural step after the arrival of funds based on Bitcoin, There are certain considerations that do not seem to play in favor of this new wave of assets that aspire to reach the stock market.

We have seen the latter in the recent actions by the SEC, which although it has not openly said that Ethereum qualify as a value, this has not prevented it from carrying out research for months to prove this premise. Reports published weeks ago suggest that the regulator could be behind the process against the Ethereum Foundation, since he has been interrogating people and entities associated with said institution.

Recently revealed internal documents put on the table that the SEC already cataloged Ethereum as a security from 2023. This is especially relevant given that both the agency and its president, Gary Gensler, have been cautious in answering questions about the applicable classification for the digital currency, avoiding pointing it out as a security in public statements.

The latter led to a public accusation by the president of the US House of Representatives Financial Services CommitteePatrick McHenry, who pointed out both the SEC like Gensler to deceive the Congress by not revealing during his participation that the agency was already considering the cryptocurrency ETH of Ethereum as a value.

Already in the final stretch for the arrival of the first verdicts, optimism over the possible approval of Ethereum spot ETFs seems to have been diluted among some applicants. The main directors of VanEck and CoinShares They indicated that they are not very optimistic about a positive response, this due to the silence and lack of comments regarding the evolution of the underlying processes.

Article by Angel Di Matteo / DailyBitcoin

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