May may not necessarily see the dawn of victory, but perhaps August can.
Author: Deep Tide TechFlow
How many people have been awakened by ETH's rise?
Bloomberg's ETF analyst Eric Balchunas unexpectedly raised the probability of approving the spot ETH ETF from 25% to 75%. He stated that he heard some rumors this afternoon that the SEC may make a 180-degree turn on this issue (which is becoming increasingly politicized), so everyone is now desperately preparing.
Subsequently, Coindesk published an article stating that three sources said the U.S. Securities and Exchange Commission has asked ETF exchanges to expedite the update of the 19b-4 application, indicating that it may approve these 19b-4 applications before the key deadline (May 23/24).
Of course, this does not mean that the ETF will be approved. The issuer still needs its S-1 application to be approved before the product can start trading.
It is reported that the 19b-4 application refers to the application submitted under Section 19(b) and Section 4 of the Securities Exchange Act. Such applications are typically submitted by securities exchanges or other self-regulatory organizations (SROs) to the U.S. Securities and Exchange Commission (SEC) to obtain approval for changes to their rules. These changes may involve the exchange's operational rules, listing standards, fee structures, etc. The SEC will review these applications to ensure that they comply with the fairness and efficiency requirements of the securities market.
The 19b-4 application is a precursor to the approval of the spot ETH ETF.
Why did the SEC suddenly make a 180-degree turn?
Perhaps, as analyst Eric Balchunas said, politics has become a major factor.
Last Wednesday, Coinbase stated in a research report that Ethereum (ETH) has the potential to bring about an unexpectedly large increase. The market may be underestimating the timing and possibility of the approval of the U.S. spot Ethereum ETF.
The author of the report, HAN, stated that if the SEC rejects the spot ETH ETF, it will consume political capital, which is not a good strategy in an election year.
Currently, SEC Chairman Gensler and two other voting commissioners are Democrats, and the other two voting commissioners are Republicans, with Democrats still dominating the senior leadership of the SEC.
Previously, Trump extended an olive branch to cryptocurrencies and loudly shouted slogans, supporting cryptocurrencies in exchange for votes. The Democratic government of Biden may not be favorable to its prospects if it continues to take a tough anti-crypto stance.
Another particularly noteworthy event is the repeal of SAB 121.
On May 17, the Senate passed H.J.Res 109, overturning SEC Staff Accounting Bulletin No. 121 (SAB121). It is worth noting that the bill passed with 60 votes to 38, indicating that a majority of both parties support the bill.
SAB121 was issued in 2022. It requires digital asset custodians to treat digital assets as liabilities and hold them at fair value on their balance sheets. If a bank custodies $1 billion worth of Bitcoin for clients, they must hold $1 billion in cash to offset this "liability" on their balance sheet.
This prevented financial firms from custodying Bitcoin and other cryptocurrencies.
However, a previous statement from the White House emphasized that if the bill (H.J.Res 109) reaches President Biden's desk, he will veto it. Biden can choose to sign, veto, or do nothing. If he chooses to do nothing, the bill will take effect without his signature.
If Biden ultimately chooses to sign or do nothing, this may truly represent a complete turnaround in the Democratic Biden administration's attitude toward cryptocurrencies.
The SEC faces the final deadlines of May 23 and May 24 to make decisions on the Ethereum ETF applications from VanEck and ARK, respectively.
Another highly anticipated time point is August. August 3 is the final deadline for Fidelity's Ethereum ETF, and August 7 is the final deadline for BlackRock's Ethereum ETF.
May may not necessarily see the dawn of victory, but perhaps August can.
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