Bernstein Analyzes Skepticism Around SEC’s Surprise Approval of Ethereum ETF

• SEC’s unexpected approval of Ethereum ETFs has raised skepticism among Bernstein analysts.
• Analysts note President Joe Biden’s veto of the bill to overturn SAB 121.
• They argue that the political narrative shift appears less credible.

Bernstein analysts cast doubt on SEC’s motives behind recent Ethereum ETF approvals, suggesting a lack of genuine political change in the U.S. crypto policy landscape.

Spot Ethereum ETF Approval: A Questionable Move?

According to Bernstein, the recent greenlight given by the U.S. SEC for spot Ethereum ETF applications last month isn’t tied to a genuine political shift as some suggest. The analysts emphasize President Joe Biden’s veto of the bill to repeal SAB 121, which further diminishes the credibility of any proposed political change narrative.

No Real Political Shift in Crypto Policy?

Bernstein analysts note that despite the speculation surrounding the SEC’s approval, there is no concrete evidence supporting a significant political change. For instance, though the U.S. House of Representatives and the Senate voted to overturn SAB 121, President Biden’s veto indicates a strong stance on consumer and investor protection, weakening the argument for a political shift.

Has the Biden Administration Reversed its Stance on Crypto?

The narrative of a political U-turn in favor of crypto is further diluted by recent historical events. Former President Donald Trump’s support for crypto, particularly through events promoting NFT sales and criticisms of the Democratic administration as anti-crypto, added fuel to speculative fires. Trump’s promise to release Silk Road founder Ross Ulbricht and halt central bank digital currency (CBDC) projects also intensified these views. However, the veto of the SAB 121 repeal bill by Biden shortly after Trump’s indictment underscores a consistent approach to regulate crypto closely.

SEC’s Strategic Moves on Ethereum ETFs

Bernstein analysts Gautam Chhugani and Mahika Sapra argue that the SEC’s approval of the Ethereum ETF was a result of strategic consideration rather than political shifts. The analysts point out that, faced with the legal and structural similarities between Bitcoin ETFs and Ethereum ETFs, the SEC adopted a pragmatic approach to sidestep potential legal battles. They state:

“The SEC recognized the inevitability of Ethereum ETFs, given their alignment with the regulatory structure of Bitcoin ETFs. The active CME ETH futures market already signals its commodity status.”

The view of Bernstein analysts is echoed by Nate Geraci, President of The ETF Store, who supports the theory that the SEC aimed to avoid further legal confrontations, asserting, “The SEC likely saw the approval as clear cut to avoid repeating past legal missteps.”

Conclusion

The Bernstein analysis highlights a more pragmatic than political rationale behind the SEC’s recent Ethereum ETF approvals. Despite speculation, there appears to be minimal evidence of a substantial political shift. Rather, the SEC’s actions seem driven by legal prudence and regulatory consistency, offering a nuanced perspective on the evolving U.S. crypto policy environment.