The SEC throws stones in Ethereum’s cart
In March, Bitcoin rose to its all-time high thanks to the ETF launch and the "halving" (halving of block rewards). The second largest of cryptos, Ethereum, has not yet been able to do the same, despite expectations.
It is clear to many people working in the crypto world that at some point the Ether coin of the Ethereum network will also get its own ETF fund, whether it took three months or more than a year. However, the US financial watchdog SEC wants to throw stones in the cart regarding the approval of the spot Ether ETF.
Currently, the Ether future is trading just under $3,200.
Last month, the SEC sent a subpoena to several companies working with the Ethereum Foundation. According to Bill Hughes of Consensus, this means that the SEC is gearing up to possibly suing the foundation in one way or another. The SEC could potentially be building a legal case aimed at declaring Ethereum a security.
Unlike Satoshi Nakamoto, who created Bitcoin, Vitalik Buterin, who developed Ethereum, is still in the picture and it is still an open question whether the launch of the Ether token was an "investment contract". The Ethereum Foundation also continues to play an active role in Ethereum blockchain development. The question is whether there is a single entity behind Ethereum and whether investors expect returns from its actions. The SEC's guidance regarding cryptos is, to say the least, incomplete.
According to Consensys’ Hughes, the reporting is clear enough for the interpretation that the SEC is investigating Ethereum. At the same time, Hughes reminds that in October of last year, the SEC allowed an ETF based on Ether futures to be traded on the stock exchange. This can possibly be interpreted that the Ether future is not a security.
If the SEC decides that Ethereum is a security, the decision would have a significant impact on the future of the blockchain. It would prevent, among other things, the one based on the spot Ether coin ETF fund launch and it would also have significant implications for American companies and investors.
It is noteworthy that the SEC has not named Ethereum as a security at any point so far.
The consensus in the crypto world currently seems to be that Ethereum is not a security, but as long as the SEC is investigating the companies operating around the Ethereum Foundation, there will be dark clouds surrounding Ethereum regarding the designation as a security. The general opinion among crypto investors is that the SEC wants to slow down the launch of the Ether spot ETF and the progress of crypto adoption in general. Unlike the US dollar, cryptos are not controlled by US officials.
In the rest of the world, things have progressed further, because Financial Supervisor of Hong Kong approved earlier this month simultaneously both spot Bitcoin and spot Ether ETFs. This puts Asian investors at an advantage in the eyes of crypto investors and may help pave the way for spot-Behind the scenes for the approval of the Ether-ETF fund.
Ether future traders can take a view through brokers operating in Finland with Vontobel's leveraged products.
Vontobel’s MFL ETH V278-minifuture offers a leveraged product for profit seeking in the rising price of Ether futures. At the time of writing, the mini future's leverage is 4.01 times, which corresponds to a 4.01 percent yield of the leveraged product when the price of the Ether future rises by one percent. If, contrary to expectations, the price of the Ether future falls by one percent, the leveraged product will incur a loss of 4.01 percent.
With Vontobel's leveraged products, you can aim for a return even at the falling price of the Ether future. MFS ETH V333-minifuture offers a 3.58x leverage to the stock's return at the time of writing. If the Ether future falls by one percent, the leveraged product will generate a profit of 3.58 percent. The value of Turbo, on the other hand, decreases by 3.58 percent, if the price of the Ether future rises by one percent.
Vontobel's investment products can be traded during the opening hours of the Helsinki Stock Exchange. When trading leveraged products, the risk of loss increases. Losing the entire invested capital is possible. The Ether future, which is the underlying asset, is quoted in US dollars, so the yield of the leveraged product also depends on the price changes of the EUR/USD currency pair. Investors bear Vontobel's credit risk when investing in Vontobel's products.
Risks
Investors in the products are exposed to the risk that the Issuer or the Guarantor may not be able to meet its obligations under the products. A total loss of the invested capital is possible. The products are not subject to any deposit protection.
The value of the products can fall significantly below the purchase price due to changes in market factors, especially if the value of the underlying asset falls. The products are not capital-protected
Due to the leverage effect, there is an increased risk of loss (risk of total loss) with leverage products, e.g. Bull & Bear Certificates, Warrants and Mini Futures.
Product and possible financing costs reduce the value of the products.
If the product currency differs from the currency of the underlying asset, the value of a product will also depend on the exchange rate between the respective currencies. As a result, the value of a product can fluctuate significantly.