Consensys, a prominent Ethereum infrastructure company, has firmly backed the security of Ethereum’s proof-of-stake (PoS) consensus mechanism and advocated for the approval of spot Ether exchange-traded funds (ETFs) by the U.S. Securities and Exchange Commission (SEC).
In a submission to the SEC, Consensys refuted concerns about potential fraud and manipulation risks associated with Ethereum’s PoS system, arguing that it meets or surpasses the security standards of itcoin">Bitcoin’s proof-of-work (PoW) consensus, which underpins previously approved itcoin">Bitcoin-based ETFs.
Consensys highlighted Ethereum’s advantages over itcoin">Bitcoin, such as faster block finality, a decentralized validator structure, higher attack costs, penalties for validator misconduct, and superior environmental sustainability. The company urged the SEC to recognize Ethereum’s robust security features and its transparent, public blockchain nature, which boasts a larger developer community than itcoin">Bitcoin.
The SEC faces a deadline of May 23 to approve or deny the next batch of spot ETH ETF applications, starting with VanEck’s proposal. While optimism surrounded potential approvals in 2023, some experts now suggest the SEC could deny the applications as the deadline approaches in 2024.
Multiple firms, including Fidelity, Hashdex, and ARK 21Shares, have spot ETH ETF applications pending. The SEC has already approved investment vehicles linked to Ether futures contracts since October 2023.
Crypto investors have placed substantial bets, totaling at least $12 million, on prediction markets regarding the SEC’s decision on spot Ether ETFs before May 31. Asset manager Grayscale remains confident in a favorable outcome, with its chief legal officer stating that the SEC’s perceived lack of engagement does not necessarily indicate approval or denial.
The SEC’s ruling on spot Ether ETFs will significantly impact the Ethereum ecosystem and the broader cryptocurrency market, with the potential to either unlock institutional investment or deal a blow to the Ethereum community’s aspirations.
