SEC Preserving Arguments in Existing Legal Actions to Deny Spot Ethereum ETFs
Finance attorney and general partner at Van Buren Capital Scott Johnsson has, in a Friday, March 22 reflection, argued that SEC is holding onto its arguments advanced in the legal actions undertaken against Binance and Coinbase.
The legal expert considers the recent scrutiny targeting Ethereum and the Ethereum foundation as a means to deny the spot of Ether exchange-traded funds. Johnsson considers the probe servers a blowback without the Gary Gensler-led Commission undermining the ongoing lawsuits against crypto exchanges.
SEC Investigating Ethereum to Appease Crypto Skeptics
Johnsson considers that the SEC announced the probe to appease the crypto skeptics seeking a tougher stance against digital currencies from the agency. The finance legal expert reflected on the call by Democrat senators Laphonza Butler and Jack Reed earlier in March urging the Commission’s chair to deny other spot crypto ETF approvals.
Johnsson observes that it links the call as replicating the stance of Massachusetts Senator Elizabeth. The anti-crypto legislator has been highly vocal in disapproving of crypto-related investment products.
Johnsson considers that the SEC probe is hedged on the theory dominating X publications that it serves to deny the spot Ethereum ETFs as the non-correlation objection incapable of holding up. However, the non-correlation objection will help the SEC deny the approval of the ETH spot ETFs in 2024.
The crypto attorney considers denying spot Ether ETFs by relying on the correlation analysis as a temporary solution. The lawyer indicates that the correlation levels are improving progressively.
Correlation involves the variance arising between the spot futures and markets as earlier advanced by the SEC to deny approval of crypto exchange-traded products (ETPs).
In March, Bloomberg ETF analyst Eric Balchunas revealed that future-spot correlations have weakened. He added that he lacks the optimism witnessed in the race for Bitcoin ETF approval.
SEC Preserving Arguments in Ongoing Legal Actions
Finally, Johnsson considers the inquiry will facilitate the SEC in threading a needle where it denies the spot of Ethereum ETFs and simultaneously preserves its arguments advanced in the legal action against Binance and Coinbase.
Johnsson reflects on the June 2023 lawsuit where the SEC alleged Binance and Coinbase offered 19 tokens the regulator classified as unregistered securities. Interestingly, Ethereum was excluded from the list and identified as unregistered securities.
The SEC chair appeared in a Bloomberg TV interview and was tasked with determining whether ETH is a security. The chair offered a vague response to the question.
Johnsson considers that the SEC is ultimately deploying the soft approach to allege the ongoing investigation into the security status. This will allow the regulator to avoid using a definitive enforcement action.
Johnsson indicated that the regulator is only advancing prob into the ETH security status to offer additional pretense that will enable it to deny approval. The finance lawyer expects the SEC to deploy a holistic approach towards Ethereum.
Executives Faults SEC’s Investigation as Afterthought
ETF Store head Nate Geraci faults SEC’s investigation, indicating that the regulator would have earlier argued that Ethereum is a security. He pointed out that the SEC is already late in its decision since, in October last year, it approved the Ethereum futures trading.
Geraci indicates that the move to make a correlation argument needs to be on time for the SEC to question why it would deny spot ETH ETF yet permit investors to acquire the ETH futures ETF.
Coinbase chief legal executive Paul Grewal illustrates that the SEC lacks good reason to deny the ETH ETP bids. He hopes that the regulator will not invent a different perspective that will question the established regulatory status of Ethereum. He indicates that the SEC repeatedly endorses Ethereum status.
US Congressman Patrick McHenry questioned the SEC’s probe targeting Ethereum status. He indicated on Thursday, March 21, that the probe differs from the CFTC assessment and the prior actions undertaken by the SEC. The lawmaker questioned Chair Gensler’s decision, given that Congress decides the SEC’s jurisdiction and budget.
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