SEC likely to restrict ETF approvals to Bitcoin and Ethereum, says Cathie Wood

Cathie Wood, CEO and CIO of Ark Invest, recently expressed her views on the likelihood of the U.S. Securities and Exchange Commission (SEC) approving exchange-traded funds (ETFs) for cryptocurrencies beyond Bitcoin and Ethereum.

During an appearance on the Wall Street Journal’s “Take On the Week” podcast, Wood mentioned, “We’d be surprised to see anything but bitcoin and ether being approved by the [SEC].” This statement reflects a cautious outlook on the regulatory acceptance of cryptocurrency ETFs in the United States.

Wood’s comments underline the ongoing debate around the classification of cryptocurrencies, with the SEC’s approval process being a critical hurdle for many digital assets aiming to gain legitimacy and broader market access through ETFs. The SEC chair, Gary Gensler, has previously characterized Bitcoin (BTC) as a commodity, a stance that has opened doors for Bitcoin ETFs but left Ethereum (ETH) and other cryptocurrencies in a regulatory grey area.

Though Ethereum has been labeled a commodity by figures such as Commodity Futures Trading Commission (CFTC) chair Rostin Benham, this does not ensure a similar non-security treatment by the SEC. This distinction is crucial as it influences the likelihood of regulatory approval for ETFs based on these assets.

Gensler’s recent comments suggest that the SEC’s recent approval of a spot Bitcoin ETF, a significant milestone for Ark Invest in partnership with 21Shares, does not signal a broader acceptance of cryptocurrency ETFs.

Ark Invest, in collaboration with 21Shares, has been at the forefront of exploring cryptocurrency ETFs, offering several funds based on Bitcoin futures strategies and Ethereum futures strategies. Additionally, Ark is actively pursuing approval for a spot Ethereum ETF, a decision eagerly awaited by the market with implications for other proposals like that from VanEck.

Interest in cryptocurrency ETFs extends beyond Bitcoin and Ethereum, with significant attention on the potential for an XRP ETF. Despite the absence of a US-based XRP ETF, Ark’s partner 21Shares offers an XRP ETP in Switzerland, highlighting the global interest in cryptocurrency investment products.

Wood also commented on the broader market dynamics, noting a shift from gold to bitcoin as an investment asset. This trend is supported by the behavior of Bitcoin investors, with a significant portion of the circulating supply remaining untouched for extended periods, indicating a long-term investment horizon among holders.

As the cryptocurrency market continues to evolve, the regulatory landscape will play a pivotal role in shaping the availability and variety of investment products such as ETFs. With key decisions expected in the coming months, investors and market observers alike are keenly watching the SEC’s moves, which could significantly impact the cryptocurrency market’s trajectory.

At the time of reporting, Bitcoin’s price saw a slight decline, trading at $49,802, marking a 1% decrease over the last 24 hours, according to CoinMarketCap data.