Spot Ether ETF Approval: Crypto Community Questions SEC's Use of “Delegated Authority”

In the last twelve hours, the crypto community has been engaged in a discussion and debate about the United States Securities and Exchange Commission (SEC)’s unique approval process for spot Ether exchange-traded funds (ETFs).

This process differed notably from the one for spot Bitcoin ETFs approval in January, which involved a vote by the five-member SEC committee, including SEC Chair Gary Gensler. The spot Ether ETFs received approval from the SEC’s Trading and Markets Division, meaning the SEC chair did not directly participate in the process.

Also, the regulator’s notice of approval concluded with the statement: “For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.”

*Concluding Statement in the U.S. SEC’s Approval Notice Source: SEC*

This difference in the approval process between the two crypto ETFs has generated significant curiosity and discussion within the crypto community.

Bloomberg ETF analyst James Seyffart called this difference a “norm.”

“Things are typically done in the same way for many approvals,”

Seyffart explained.

“If the SEC required an official vote for every decision or document, it would be overwhelming. It would have been nice to see where the political lines were drawn.”

The analyst further noted that though the approval was issued through delegated authority, the SEC chief or any other commissioner could potentially question or call for a review of the process. In his words:

“So far, this is the most intriguing part of the filing to me: The approval was issued via delegated authority which means there won’t be public commissioner votes to see.

But it also means any commissioner (maybe Crenshaw?) can technically challenge and ask for a review/vote.”

However, not everyone agreed with Seyffart’s view. An X user, @TheThinker34, pointed out that a commissioner could challenge the decision within the next ten days, suggesting that using delegated authority might be a tactic to avoid public voting for political reasons.

Another user, Kyle Chassé (@kyle_chasse), also attributed the SEC’s decision to political pressure and the upcoming U.S. presidential elections. The user noted that the approval seems to be a “strategic trade-off” in implementing ESG (Environmental, Social, and Governance) rules.

UNPOPULAR OPINION ON ETH ETF APPROVAL… ⚠️
Insights on Why ETH Isn’t Mooning and why SEC doesn’t want to comment…
Key Points:
– 19b-4 Approvals, Not S-1s: Only 19b-4 forms have been approved, not S-1s.
– Delegated Authority: The approval was given by the Division of Trading…
— Kyle Chassé (@kyle_chasse) May 24, 2024

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