In order to fully address the legal and regulatory considerations involved, the SEC has established a comment schedule for the Invesco Galaxy Ethereum ETF. Initial comments will be discussed over a period of 21 days, followed by a 35-day period to consider counterarguments.
The SEC had previously delayed its decision on ether spot ETF applications from Grayscale Investments, Fidelity, and BlackRock. The regulator is seeking to gain a comprehensive understanding of Ethereum’s Proof-of-Stake (PoS) consensus algorithm, as well as evaluate the potential risks associated with the decentralized control of the network.
Financial analyst James Seyffart from Bloomberg believes that the SEC’s decision to postpone the launch of the Invesco Galaxy Ethereum ETF was predictable. He anticipates that the SEC will continue to create uncertainty for filers in the coming months but should ultimately approve the investment product by May 23.
On the other hand, Nikolaos Panigirtzoglou, a Managing Director at JPMorgan, suggests that for spot Ethereum ETFs to be approved in May, ether would need to be classified as a commodity, similar to Bitcoin, rather than a security. He estimates the likelihood of the SEC defining ether as a commodity by May at 50%.
It is worth noting that SEC Chairman Gary Gensler, who has expressed skepticism towards cryptocurrencies, played a decisive role in approving a spot Bitcoin ETF. Additionally, SEC Commissioner Hester Peirce has recently provided assurance that crypto companies no longer need to resort to legal action to convince the agency to approve ETFs for ether.