New details emerged suggesting the US Securities and Exchange Commission (SEC) might classify Ether as a security, according to a recent The Block report. This could lead to rejections of upcoming spot Ether Exchange Traded Funds (ETFs).

The clue came from a March filing related to a spot Ether ETF application. The SEC asked a question about whether the ETF adhered to a rule for "Commodity-Based Trust Shares." This rule defines such shares as securities that hold underlying commodities.

Analysts believe this indicates the SEC is considering classifying Ether as a security, potentially leading to denials of spot Ether ETF applications. However, opinions are divided. Some believe the SEC won't go that far due to previous approvals of Ether futures ETFs. Others see it as a possibility, citing the "nuclear option" of contradicting past actions.

The SEC has deadlines in late May to decide on spot Ether ETF applications from VanEck and ArkInvest/21 Shares. This news adds uncertainty to the already slim chances of approval.

Resources:

The Block