ETH ETF IMPACT – The U.S. Securities and Exchange Commission approved a key regulatory filing for a proposed exchange-traded fund (ETF) that tracks the price of Ether (ETH), the native cryptocurrency of the Ethereum blockchain. For months, there had been speculation that the regulator would likely reject the product. While most Ethereum supporters likely applauded the move, as the price of the ETH token soared, developer ConsenSys couldn’t miss the opportunity to tweet, “This last-minute approval is yet another example of the SEC’s troubling ad-hoc approach to digital assets.” ConsenSys, which is suing the SEC, argued that the approval could mean that Ethereum is no longer at risk of being declared a security, which could trigger tough regulation. The approval is not yet final, as the SEC only approved the 19b-4 filing for the proposal, not the S-1 registration statement that would be required before the ETF can begin trading. Those green lights could still be months away. (This distinction caused a bit of a controversy on predictions betting platform Polymarket, as some bettors who bet on the negative claimed they hadn’t officially lost.) What emerged last week was that the SEC will not allow ETF issuers to stake ETH tokens, essentially stripping holders of the right to earn additional yields. From a blockchain security perspective, this could mean a reduction in the circulating ETH supply that can be leveraged in Ethereum’s proof-of-stake consensus mechanism. According to a Tuesday report from analytics firm Coin Metrics, “the inability for issuers to stake ETH could have potential implications on ETH supply dynamics, the health of Ethereum’s consensus layer, and the entire staking ecosystem.” Another question may be how well new ETF buyers actually understand how smart contract blockchains work.
