Gary Gensler Remains Cagey on Ethereum, Punts on Potential ETF

In the immediate aftermath of this week’s historic approval and listing of 10 spot Bitcoin ETFs, excitement has spread to the Ethereum community that a spot ETH ETF could now be imminent.

But for those concerned about too much celebration in one week, worry not: Securities and Exchange Commission (SEC) Chair Gary Gensler is always there to rain on the parade. 

In an interview with CNBC this morning, Gensler gave very little encouragement when asked if a spot Ethereum ETF is poised to gain SEC approval any time soon. 

“I look at what we did this week as cabin to one non-security commodity called Bitcoin,” Gensler said. “Like we’ve had gold spot exchange-traded products, and silver spot exchange-traded products approved in the past, this is cabin just to that one non-security commodity token.”

Gensler refused to say anything further about an Ethereum ETF specifically. But his word choice was telling: By emphasizing his view of Bitcoin as a commodity, the SEC chair was likely attempting to draw an implicit line between Bitcoin’s unchallenged status as a commodity, and the potential status of all other cryptocurrencies—including Ethereum—as securities. 

For years, Gensler has repeatedly maintained that Bitcoin is the only cryptocurrency he views as certainly being a commodity, meaning one therefore outside the SEC’s purview.

While the SEC has yet to make any official pronouncements about Ethereum’s security status, the agency has previously signaled in legal filings that it views all Ethereum transactions as falling under its jurisdiction.

If the SEC were to view Ethereum as a security, that would likely make the regulator even more hostile to a spot Ethereum ETF than it was to a Bitcoin ETF, which it previously rejected for years on end before essentially being forced to do so by a federal appeals court.

That same court decision, though, might also force the SEC to approve a spot Ethereum ETF. As Gensler himself noted this week in his statement regarding the Bitcoin ETF approval, the “circumstances” surrounding crypto ETFs “have changed” due to legal judgments.

The SEC was ordered to review Grayscale’s Bitcoin ETF application in October because, the judges found, it could not arbitrarily deny a spot Bitcoin ETF after approving a Bitcoin futures ETF application. The SEC already approved an Ethereum futures ETF that same month, potentially setting up a parallel legal scenario.

Futures ETFs track the price of derivatives contracts, which themselves grant the buyer the ability to buy or sell Bitcoin at a later date. No Bitcoin is actually bought and sold when futures ETFs are bought and sold. Spot ETFs are different; their issuers actually buy and store Bitcoin on behalf of clients.

Ethereum is up big this week on excitement spurred by the spot Bitcoin ETF approvals, with hopes that a spot Ethereum ETF could be up next. The token approached $2.700 this morning for the first time since April 2022 after BlackRock CEO Larry Fink told CNBC that he’s all in on an Ethereum ETF, and considers this week’s events “just the beginning.”

Edited by Andrew Hayward