Bernstein Dismisses Political Influence in SEC Approving Spot Ethereum ETF Amid Biden’s Veto
Bernstein analysts weighed on the shifting US political narrative, doubting it would influence the Securities and Exchange Commission (SEC) ‘s decision on the spot Ethereum ETF)
Bernstein analysts Mahika Sapra and Gautam Chhugani consider the Gary Gensler-led regulator approved the 19b-4s to avert the protracted legal battle witnessed in the quest for spot Bitcoin Exchange-traded funds (ETFs).
Bernstein’s prediction comes after US President Joe Biden vetoed Res 109, which was passed to repeal the Staff Accounting Bulletin (SAB) 121.
The research and brokerage firm’s analysts doubted that political shift fueled the stunning turn by the SEC to approve spot Ether ETFs. The SEC’s move last month appears unlikely, inspired by political narratives, particularly with President Biden vetoing the bill passed via bipartisan support.
The House and Senate saw a majority vote to overturn the SAB 121 last month. The legislators considered the bulletin controversial by establishing accounting standards that were termed unviable for banks offering crypto custody.
Bernstein analysts reflect on former President Donald Trump, who publicly endorsed crypto besides hosting holders of the Trump Mugshot NFTs (non-fungible tokens). The Trump campaign unveiled acceptance of campaign donations and labeled the Biden administration and Democrats anti-crypto.
Bernstein analysts acknowledge that Trump subsequently vowed to free the Silk Road developer Ross Ulbricht. The Republican candidate for the November 4 presidential election pledged to halt the central bank digital currencies (CBDCs) and safeguard crypto self-custody while addressing the audience at the May 25 Libertarian Convention.
Bernstein analysts hold that the Trump-led events convinced the majority in the crypto industry that the accelerated spot Ethereum ETF approvals portrayed a major shift in the US policy on digital assets. A segment of the industry suggested that the Biden administration had changed its tone towards crypto.
A letter sent by President Biden confirmed the vetoing of the bill that aimed at repealing the SAB 121. The letter posted on Friday, May 31, informed the US House of Representatives that the administration cannot support efforts to compromise the well-being of US investors and consumers.
Bernstein Rules out Political Narrative in Spot ETH ETFs Approval
The letter to veto the bill seeking to overturn the SAB 121 came a day after the jury found Trump guilty of the historic hush money trial. Chhugani and Sapra revealed in the Monday, June 3 note that considering the veto to the proposed repeal of SAB 121 weakens the link of the political narrative behind the SEC spot ETH ETF approval.
Chhugani and Sapra consider the spot ETH ETF approval to be a more pragmatic approach. The analysts consider the authorization to be an effort to avoid the legal battle.
Bernstein analysts consider that the SEC was aware of the looming corner that was similar to the regulatory setup of the Bitcoin ETF. The analysts illustrated the correlation between spot and futures, which was worsened by the CME ETH futures segment portraying the commodity status.
Bernstein analysts consider the Grayscale victory over the SEC paved the way for the GBTC Bitcoin Trust conversion to the spot Bitcoin ETF. The ETF Store President Nate Geraci had earlier indicated that Biden’s veto did not support the suggestion that the spot politics prompted Ethereum ETF approval.
Geraci indicated that the SEC aimed to avoid lawsuits and potential losses. The executive added that the ground for approving the spot ETH ETFs was straightforward.
Spot Ethereum ETFs Flows
The crypto community appears delighted by the SEC’s approval of 19b-4s. The May 23 decision has left the industry optimistic about S-1 registration statements approval for the spot ETH ETFs to start trading in a process estimated to take weeks.
Bernstein analysts project the emergence of pent-up demand from those participating in the spot Bitcoin ETFs. However, the analysts anticipate a lower allocation flowing to the spot Ethereum alternatives.
The analysts cite the ETH supply situation, including HODL data, staking, and smart contracts, as likely to drive the positive price action upon their unveiling.
Wirehouses to Support Bitcoin ETFs
Chhugani and Sapra reflected on the Consensus event held in Austin and the US Strategic Decisions conference hosted in New York, which indicated that national wirehouses and wealth advisors would embrace the spot Bitcoin ETFs.
Bitwise chief investment executive Matt Hougan indicated that the issuers are devoted to having the spot Bitcoin ETFs whitelisted with the national wirehouses and wealth advisors.
Hougan considers that the subsequent two quarters will witness increased activity from wirehouses marketing Bitcoin ETFs to wealthy customers. The investment executive believes the wirehouses will restore momentum in the inflows, triggering more demand for Bitcoin.
Gautam and Chhugani indicated that the Bitcoin mining segment will witness increased consolidation. The analysts pointed to the Riot acquiring nearly 10% of Bitfarms, indicative of large-scale access to the large capital necessary to compete for energy and land amid fierce competition.
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