U.S. Securities and Exchange Commission (SEC) Chairman Gary Gensler is likely to cast the deciding vote in today’s vote on a spot Ethereum exchange-traded fund (ETF).
In January, the SEC’s five commissioners voted to approve a spot Bitcoin ETF. Crypto-friendly Hester Peirce and Mark Uyeda voted in favor, while Carolyn Crenshaw and Jaime Lizaraga voted against. Gary Gensler made the deciding vote, which resulted in a 3-2 approval on January 10, 2024.
The same five SEC commissioners will vote on VanEck’s spot Ethereum ETF on May 23. Here’s what we know about them.
Hester Peirce, nicknamed “Crypto Mom,” is known for her positive stance on digital assets and support for the decentralization of the financial system. Although she did not disclose her vote for the spot Ethereum ETF, she remains close to the Ethereum community. At the end of February this year, she attended the Ethereum Denver event and spoke at the event, demonstrating her involvement.
Peirce has criticized the SEC’s regulation of the cryptocurrency industry, calling parts of its approach “ineffective” and “pointless.” Her stance reflects her desire to see a more decentralized and resilient financial system.
Carolyn Crenshaw is a critic of the cryptocurrency industry and voiced her dissenting opinion in the spot Bitcoin ETF decision. She believes that the price of spot Bitcoin ETFs will be affected by fraud and market manipulation throughout the industry. Crenshaw believes that by approving these products, the SEC will fail to protect American investors.
There is no sign that Carolyn Crenshaw has changed her mind about spot cryptocurrency ETFs. She criticized these markets for their lack of systemic regulation and inadequate measures to prevent fraud and manipulation. Crenshaw noted that spot trading is fragmented across various international venues, many of which are not properly regulated.
Mark Uyeda, like Hester Peirce, has criticized the SEC’s “enforcement regulation” approach to cryptocurrencies. He objected to the SEC’s denial of Coinbase’s petition last December, accusing the agency of arbitrary rulemaking. Uyeda voted in favor of approving the spot Bitcoin ETF but expressed “strong concerns” about the decision-making process, claiming that the SEC strayed from its “significant market” test for exchange-traded products.
Uyeda described the SEC’s reasoning as “flawed,” but he did not explicitly state his reasons for voting in favor of a spot Bitcoin ETF, leaving uncertainty as to whether those reasons apply to a spot Ethereum ETF. His critical stance reflects ongoing tensions at the SEC over cryptocurrency regulation and the need for clearer guidance.
Jaime Lizaraga voted against approving a spot Bitcoin ETF and has not made a statement since. In a speech at Brooklyn Law School in November 2022, he argued that Bitcoin has not lived up to its promise as a viable alternative to traditional finance or true financial inclusion. He opposes the SEC's "enforcement regulation" approach to cryptocurrency regulation.
Lizaraga believes that most cryptocurrencies fall under U.S. securities laws and therefore operate illegally. There is no indication that he has changed his views following the approval of the spot Bitcoin ETF.
SEC Chairman Gary Gensler will hold a decisive vote on the application for a spot Ethereum ETF this week. Although he previously voted in favor of approving a spot Bitcoin ETF, he is not expected to approve a spot Ethereum ETF.
Gensler’s classification of Ethereum comes amid ongoing regulatory uncertainty. The SEC is currently investigating whether Ethereum should be considered a security, which complicates the approval of any related financial products.
Additionally, Gensler expressed concerns about market manipulation and the lack of strong regulation in the cryptocurrency space. These concerns are exacerbated by the fragmented nature of spot trading across many international platforms, many of which have minimal oversight.
In a May 7 interview with CNBC, Gensler confirmed that the SEC is still reviewing the decision, saying:
This cautious stance, combined with the broader regulatory environment and specific issues surrounding Ethereum, led to expectations that Gensler would vote against approving a spot Ethereum ETF.
Meanwhile, SEC Enforcement Director Gurbir Gwal is investigating Ethereum’s status as a potential security.
Some fund managers claim that the SEC is less involved in spot Ethereum ETFs.
A Bitwise lawyer mentioned that some fund managers now expect the SEC to reject the application this week.
Nate Grassi, president of the ETF Store, noted that the SEC could approve the 19b-4 filing (exchange rule change) but delay the S-1 filing (registration statement), preventing an immediate launch.
Bloomberg analysts Eric Balkunas and James Seifat predicted that the odds of at least one spot Ethereum ETF being approved on May 23 were 25%, down from 70% in January.