Haynes Boone Partner Matthew Frankle was quoted in a Bloomberg News article after seven issuers have begun pushing US regulators to greenlight funds tracking Ether, the world’s second-largest cryptocurrency.
One potential obstacle is the SEC’s stance on the legal classification of Ether - specifically, whether it should be considered a commodity or a security. For an Ether ETF to be approved, the SEC “has to effectively come to a conclusion that ETH is not a security,” said Frankle.
The current applications are filed assuming Ether is a commodity, similar to Bitcoin. But if the regulator were to determine between now and May 23 that Ether was a security instead, that would introduce a whole ecosystem of regulated entities surrounding the ETF that the current filings have not set up.
“If it’s a security, it needs to be traded on a registered exchange, which Coinbase is not. If you are buying and selling securities, that needs to be done by a broker-dealer,” another aspect that’s difficult, Frankle said. Coinbase Global Inc. is the largest US crypto trading platform.
To read the full article in Bloomberg News, click here.
