Ether Soars 23% as SEC Reevaluates ETH ETF Approval After Trump Turns Pro-Crypto

(Kitco News) – Cryptocurrency prices have risen over the past 24 hours amid an about-face from the U.S. Securities and Exchange Commission (SEC), which is now considering approval of several Ethereum points (ETH) exchange-traded funds (ETFs) after months of doubts and delays.

In recent months, analysts have reached a consensus that approval of a spot Ether ETF was unlikely as the SEC has shown little engagement with the applicants, while SEC officials have repeatedly said they consider Ether a security.

But with the US election season underway and crypto becoming a trending topic – with Donald Trump warning that Democrats attack the industry while he would welcome it with open arms – the SEC appears to be re-evaluating its approach and is now struggling to secure approval for ETFs.

On Monday, CoinDesk reported that the SEC had asked Ether ETF applicants to update their 19b-4 filings before this week’s deadline, which was the signal needed to show that the regulator was now serious about evaluating the requests.

After the story broke, Bloomberg ETF analysts Eric Balchunas and James Seyffart Updated its chances of approval from 25% to 75%, with Balchunas saying the move came after “hearing rumors this afternoon that the SEC might be doing a 180 on this (increasingly political issue), so now everyone is scrambling ( like us, everyone assumed they’d be denied).”

Amid resistance from some over the radical increase in the chances of approval, analyst Nic Carter came to the defense of Balchunas and Seyffart, tweeting, “How could anyone predict that Trump would endorse crypto and the Democrats would throw a Hail Mary and pivot? This was not predictable.”

Since reports of the turnaround emerged, several asset managers have updated their filings to remove any language related to Ether staking, which was the main issue in the debate over whether Ether is a security and a commodity.

Fidelity was one of the first to adjust its request, filing an S-1 to update on Tuesday morning, showing that they have reversed plans to stake Ether holdings in their proposed spot ETF. In previous filings, the company said it intended to “stake a portion of the trust’s assets” to “one or more” infrastructure providers, but in the update, the company clearly states that it “would not stake the ether” stored with the custodian.

Alex Thorn, head of research at Galaxy Digital Research, he said the SEC is trying to “blur the line between ‘ETH’ NOT being a security and ‘staking ETH’ (or even more fragile, ‘staking as an ETH service’) as BEING a security.”

“This would be somewhat congruent with its various lawsuits, as well as reports on its various investigations, and would perhaps allow the SEC to approve Ethereum ETFs while maintaining its previously stated/argued views,” he added. “In this case, and perhaps for other reasons, we would expect the SEC to prohibit ETFs from staking the ETH they hold.”

There are now nine Ether ETF applications pending with the SEC, with VanEck and ARK filings due for final review on May 23 and 24, respectively.

According to Joseph Edwards, head of research at Enigma Securities, the SEC’s decision to take a hardline stance against Ether ETFs after approving spot Bitcoin (Bitcoin) ETFs seemed out of step with how things are normally done.

“Opposing the ETH ETF after BTC was approved always seemed like an odd case for the SEC to try to push unless they were willing to open up questions about the status of Ethereum securities more broadly, and it is likely that the decision has come somewhere not to accept this fight”, Edwards counted Reuters.

Geoff Kendrick, head of FX and digital asset research at Standard Chartered, told Forbes India that they are “80% to 90%” certain that the SEC will approve spot Ether ETFs later this week. He added that the bank anticipates first-year inflows into spot Ether ETFs to be between 2.39 and 9.15 million Ether, or about $15 billion to $45 billion.

They also believe that any bad news is already priced in for both Bitcoin and Ether and “positive structural factors” are expected to take control again, which led Kendrick to reiterate the bank’s year-end price targets of US$ 150,000 for Bitcoin and $8,000 for Bitcoin. Ether.

But according to for Seyffart, although approval of 19-4b applications could occur on May 23, “We also need S-1 approvals. It could be weeks or months before we see S-1 approvals and thus an active ETH ETF. That said, if we are correct and we see these theoretical approvals later this week. This *should* mean that S-1 approvals are a matter of ‘When’ and not ‘If’…”

The sudden increase in approval odds gave a shot of adrenaline to the price of Ether, which rose from $3,115 on Monday to a high of $3,837 in early trading on Tuesday, an increase of 23.1% .

Ethereum/USD Chart by TradingView

At the time of writing, Ether was trading at $3,785, up 22.2% on the 24-hour chart, while Bitcoin was trading at $70,215, up 4.95%.

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