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The cryptocurrency market continues to see noteworthy developments. Accordingly, Consensys, addressed the investigation by the United States Securities and Exchange Commission (SEC) into potential fraud and manipulation risks associated with Ethereum‘s proof-of-stake system, particularly regarding spot Ethereum exchange-traded funds (ETFs). Let’s examine the details together.
Prominent Company Highlights Ethereum in New Article
Consensys, the company responsible for the popular MetaMask wallet and a blockchain and Web3 software development firm, stated in a comment letter to the regulatory body that concerns over fraud and manipulation are unfounded. Consensys shared the following in a blog post:
“In fact, Ethereum’s PoS implementation meets and even exceeds the security of Bitcoin‘s proof-of-work (PoW), which underpins the Bitcoin-based ETFs approved by the SEC for trading”
The Ethereum infrastructure company highlighted Ethereum’s advantages: faster block finality than Bitcoin, division of responsibilities among bidders and participants to deter stakeholder dominance, higher attack costs, penalties for validator rule violations, and superior environmental sustainability compared to Bitcoin.
Consensys, emphasized that Ethereum has a larger developer community and operates on a completely transparent and public blockchain network. Consensys called on the SEC to recognize Ethereum’s superior security features that surpass those of Bitcoin-based ETPs previously approved by the SEC.
The Ethereum ETF Approval Process Continues
While the popularity of spot Bitcoin ETF funds has been proven, the approval of a spot Ethereum ETF fund remains controversial and is up for debate this year. The SEC’s deadline to approve or reject the next spot Ethereum ETF applications, starting with VanEck’s investment product, is coming up on May 23rd. While many experts are optimistic about approval in 2023, some suggest the commission could reject applications until 2024.
Several firms, including Fidelity, Hashdex, and ARK 21Shares, are awaiting approval or rejection of their Ethereum ETF applications. The SEC began approving investment products tied to Ethereum futures in October 2023.
Investment management firm Grayscale, expressed belief that the SEC will make a positive decision on spot Ethereum ETF funds by May. On March 25th, Grayscale’s chief legal officer Craig Salm stated that what might be perceived as a lack of interaction with applicants by the SEC does not indicate whether an ETF will be approved or not.
