Consensys, the blockchain and Web3 software development company, has responded to the United States Securities and Exchange Commission’s (SEC) inquiry regarding potential fraud and manipulation risks associated with Ethereum’s proof-of-stake (PoS) system and spot Ether (ETH) exchange-traded funds (ETFs). In a comment letter submitted to the regulatory agency, Consensys argues that concerns about fraud and manipulation are unfounded.
According to Consensys, Ethereum offers several advantages over Bitcoin, including faster block finality, a division of responsibilities among proposers and attesters to prevent stakeholder dominance, higher attack costs, penalties for validator rule violations, and superior environmental sustainability. Additionally, Ethereum boasts a larger developer community and operates on a transparent and public blockchain. Consensys urges the SEC to recognize Ethereum’s superior security features, which surpass those of Bitcoin-based ETFs previously approved by the SEC.
While spot Bitcoin (BTC) ETFs have gained significant popularity, the approval of a spot Ether ETF in May of this year remains uncertain. The final deadline for the SEC’s decision on the next round of spot ETH ETF applications is May 23, starting with VanEck’s investment vehicle. While many experts are optimistic about approval in 2023, some believe that the SEC could deny the applications and extend the decision into 2024.
Several firms, including Fidelity, Hashdex, and ARK 21Shares, have spot ETH ETF applications pending approval or denial. The SEC began approving investment vehicles tied to Ether futures in October 2023. Crypto gamblers have placed bets on whether spot Ether ETFs will be approved by the SEC before May 31, with the total bets on ETF outcomes reaching at least $12 million on the predictions market. The SEC has previously approved the trading and listing of 10 spot Bitcoin ETFs on Jan. 10.
Grayscale, an investment management company, is confident that the SEC will make a favorable decision regarding spot Ether ETFs by May. Craig Salm, Grayscale’s chief legal officer, stated that the SEC’s perceived lack of engagement with applicants does not indicate whether an ETF will be approved.
In other news, Ether ETFs are facing opposition in the Senate, Craig Wright is not Satoshi Nakamoto, and Dencun has gone live. This is summarized in Hodler’s Digest from March 10-16.