Ethereum ETF Approval Political Narrative Looks 'Less Credible': Bernstein

The idea that a political shift led to the SEC’s approval of spot Ethereum ETFs last month has been called into question after President Joe Biden vetoed a bill aimed at overturning SAB 121.

What Happened: According to research from brokerage firm Bernstein, this recent veto undermines the notion of a political change influencing the SEC’s decision, The Block reported.

In May, both the House and Senate voted to repeal the SEC's staff accounting bulletin, SAB 121.

This bulletin set accounting standards for crypto custodians, making it impractical for Wall Street banks to hold crypto assets for clients.

President Biden's veto of this repeal indicates a continued stance on strict crypto regulation, with Biden stating, “My Administration will not support measures that jeopardize the well-being of consumers and investors.”

Former President Donald Trump recently expressed strong support for cryptocurrencies, even hosting an event for his Trump "Mugshot" NFTs and promising to support crypto self-custody and oppose central bank digital currencies (CBDCs).

His actions and statements led some to believe that the approval of Ethereum ETFs indicated a broader policy shift in favor of crypto.

Also Read: Donald Trump’s Crypto Wallet Grows By $500K In Value Following Trial

However, analysts from Bernstein, including Gautam Chhugani and Mahika Sapra, argue that the SEC’s approval of Ethereum ETFs was more likely a pragmatic decision to avoid legal conflicts, rather than a result of political influence.

The SEC, facing similar regulatory frameworks for both Bitcoin BTC/USD and Ethereum ETH/USD ETFs, likely sought to avoid another legal battle, particularly after Grayscale won its case against the SEC regarding the conversion of its GBTC Bitcoin Trust to a spot Bitcoin ETF.

This perspective is supported by Nate Geraci, President of The ETF Store, who noted that Biden's veto reinforces the idea that the approval of spot Ethereum ETFs was not politically driven.

“The SEC didn’t want to get sued and lose again,” Geraci commented, adding that the case for approval was straightforward.

For more insights into the evolving digital assets landscape and regulatory developments, industry leaders will gather at the Benzinga Future of Digital Assets event on Nov. 19.

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