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Bernstein Skeptical About SEC’s Ethereum ETF Greenlight After Biden’s Veto


Berstein analysts believe the SEC’s quick approval of Ethereum ETF isn’t as trustworthy after Biden’s veto.

They say Biden’s rejection of the SAB 121 repeal bill hints that the SEC might have acted to dodge a lawsuit.

Biden’s Recent Move Questions SEC’s Ethereum ETF Decision

The recent approval of spot Ethereum ETFs by the Securities and Exchange Commission (SEC) sparked speculation of a political shift.

But, according to research from Bernstein, President Biden’s veto of a bill aimed at overturning SAB 121 complicates this narrative.

In May, the House and Senate voted to repeal SAB 121, a bulletin setting standards for crypto custodians.

Critics argued that the bulletin made it tough for Wall Street banks to handle crypto assets for clients.

Ethereum ETF

Source: X Post

Former President of the United States, Trump, also pledged support for crypto, hosting events for NFT buyers and accepting crypto for campaign funds.

However, Biden’s veto of the SAB 121 repeal bill suggests a different stance.

Bernstein analysts Gautam Chhugani and Mahika Sapra believe the SEC is taking a practical approach to avoid getting into legal battles.

According to a source, these analysts note similarities between Ethereum and Bitcoin ETFs, hinting at the SEC’s anticipated challenges.

In August 2023, a court ruling favored Grayscale in its case against the SEC, impacting the approval of Bitcoin ETFs.

This legal issue likely influenced the SEC’s approach to Ethereum ETFs.

Nate Geraci, President of The ETF Store, agrees, suggesting the SEC wanted to sidestep potential lawsuits.

He believes the case for approval was straightforward, emphasizing the SEC’s desire to avoid litigation.

What Comes Next After SEC Approval

Excitement looms after the SEC approved 19b-4 forms for eight spot Ethereum ETFs, including those from Fidelity and BlackRock, on May 23.

However, according to a source, issuers must wait for their S-1 registration statements to take effect before trading kicks off.

Notably, this process could stretch up to days or even weeks.

According to Bernstein analysts, there’s anticipation among investors similar to what we saw with spot Bitcoin ETFs.

Yet, they predict a slightly lesser interest in spot Ethereum alternatives.

Further, they highlight Ethereum’s unique characteristics, such as staking, smart contracts, and HODL.

This pending launch raises questions about how the market will react to the introduction of Ethereum ETFs.

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