Consensys responded to an inquiry from the US Securities and Exchange Commission (SEC) regarding possible fraud and manipulation risks associated with Ethereum’s proof-of-stake system, specifically with regard to exchange-traded funds (ETFs) that are based on spot Ether. Consensys, the blockchain and Web3 software development business behind the well-known MetaMask wallet, claimed in a letter of comment sent to the regulatory body that worries about fraud and manipulation are unfounded.
As stated by Consensys in a blog post, “In actuality, Ethereum’s proof-of-work (PoS) implementation surpasses and even matches the security of Bitcoin’s PoW, which powers Bitcoin-based exchange-traded funds (ETFs) that have already received SEC approval for trading.”
The Ethereum infrastructure company outlined the benefits of Ethereum over Bitcoin, including its faster block finality, greater environmental sustainability, higher attack costs, stakeholder dominance deterrent division of responsibilities between proposers and attesters, and penalties for validator rule violations.
Consensys emphasized that Ethereum runs on a completely open and transparent blockchain and has a bigger development community than Bitcoin. Consensys asked the SEC to recognize that Ethereum has more security measures than the Bitcoin-based ETPs that the SEC had previously certified. It’s unclear if a spot Ether ETF will be approved in May of this year, despite the fact that spot Bitcoin ETFs have shown to be incredibly popular.
VanEck’s investment vehicle will be the first to be approved or denied in the upcoming round of spot ETH ETF applications by the SEC, with the final deadline being May 23. While a number of experts appeared to be bullish about approval in 2023, others have stated that the commission may still reject applications in 2024.
Spot Ethereum ETF applications are pending approval or rejection from a number of firms, including Hashdex, ARK 21Shares, and Fidelity. In October 2023, the SEC started to approve investment vehicles linked to Ether futures.
Cryptocurrency traders are speculating on whether the US SEC will permit spot Ether ETFs before May 31. On the prediction market, wagers on the ETF results have totaled at least $12 million. On January 10, the SEC finally gave the go-ahead for the trading and listing of 11 spot Bitcoin ETFs.
Grayscale, an investment management company, is certain that the SEC will rule in favor of spot Ether ETFs by May. Craig Salm, chief legal officer of Grayscale, stated on March 25 that the SEC’s alleged “lack of engagement” with applicants is not a reliable indicator of an ETF’s approval status.