Galaxy Digital Insider Reveals Potential SEC Move to Classify Ethereum (ETH) as a Security

• Alex Thorn, the Head of Research at Galaxy Research, speculated that the SEC could differentiate between Ethereum (ETH) and staked Ether, possibly classifying the latter as a security.
• He noted that this distinction could provide a regulatory loophole for approving spot Ethereum ETFs.
• “If the speculation about a 180 from SEC on the Ethereum ETFs is true, I would guess they try to thread a needle between ‘ETH’ NOT being a security and ‘staked ETH’ as BEING a security,” Thorn stated in a May 21 post on X.

Explore the potential regulatory shifts and their implications for Ethereum and its investors.

Spot Ethereum ETF Approval Loophole

This potential distinction could have implications for spot Ethereum ETFs, which the SEC has been reluctant to approve so far. According to Thorn, this shift would align with the SEC’s ongoing legal battles and investigations, enabling it to approve spot Ethereum ETFs while maintaining consistency with its previous arguments and positions.

SEC Approval Optimism

Bloomberg Intelligence ETF analysts Eric Balchunas and James Seyffart increased their predicted likelihood of a spot Ether ETF approval from 25% to 75% on Monday. This change followed discussions suggesting that the SEC might adopt a more favorable stance towards these applications.

Conclusion

The evolving landscape of cryptocurrency regulation continues to present both challenges and opportunities. As the SEC navigates these complex waters, the potential for spot Ethereum ETFs looks increasingly promising, offering a new avenue for investors to engage with one of the leading cryptocurrencies.