In a recent interview with WSJ, ARK Invest CEO Cathie Wood shared her insights on the regulatory trajectory of cryptocurrency exchange-traded funds (ETFs) in the United States. Wood anticipates that the US Securities and Exchange Commission (SEC) will limit its approval to spot ETFs for Bitcoin and Ethereum, signaling potential challenges for other cryptocurrencies in the regulatory approval process.

The SEC has recently granted approval for several spot Bitcoin ETFs, acknowledging Bitcoin’s classification as a commodity rather than a security. However, Wood suggests that this approval might not extend to a broader range of cryptocurrencies, emphasizing a distinctive advantage for Bitcoin and Ethereum.

Wood stated in the interview, “We’d be surprised to see anything but Bitcoin and Ether being approved by the SEC.”

The context and details of Wood’s statement will be further explored in an upcoming episode of WSJ’s Take On the Week podcast. The SEC’s cautious stance on cryptocurrencies, considering many of them as securities, adds an additional layer of complexity to the approval process for crypto ETFs.

The regulatory landscape surrounding crypto ETFs gained attention after the recent approval of spot Bitcoin ETFs. While this marked a significant development for the crypto industry, the SEC clarified that the approval specifically pertains to ETPs (Exchange-Traded Products) holding Bitcoin, and it does not necessarily open the door for the approval of ETFs based on other cryptocurrencies.

SEC Chair Gary Gensler highlighted this in a statement, saying, “Today’s Commission action is cabined to ETPs holding one non-security commodity, bitcoin. It should in no way signal the Commission’s willingness to approve listing standards for crypto asset securities.”

Wood’s ARK Invest, in collaboration with 21Shares, initiated the pursuit of regulatory approval for a spot Ethereum ETF in September of the previous year. Despite the enthusiasm in the crypto community, Wood’s recent comments suggest that the SEC might present challenges for the approval of spot ETFs for cryptocurrencies beyond Bitcoin and Ethereum.

The Ethereum ETF race has attracted several major players in the asset management space, including BlackRock, Grayscale, and Franklin Templeton, following ARK Invest’s lead. BlackRock CEO Larry Fink, echoing sentiments similar to Wood’s, expressed the value he sees in having an Ethereum ETF. Fink emphasized that Bitcoin and Ethereum ETFs are crucial steps towards the broader tokenization of assets.

While the SEC approved several Ethereum futures ETFs for trading in October of the previous year, the fate of spot Ethereum ETF applications, including ARK Invest’s, remains uncertain. Wood’s cautious outlook aligns with a broader sentiment in the industry, emphasizing the need for a gradual and strategic approach to regulatory approvals. Wood’s prediction sheds light on the regulatory landscape that shapes the future of crypto investment products in the US. If the SEC indeed limits its approval to Bitcoin and Ethereum, it could have a profound impact on market dynamics, influencing investor preferences and the development of new financial instruments in the crypto space.

As the crypto community eagerly awaits further developments, the regulatory landscape continues to evolve, shaping the future of crypto ETFs and their role in mainstream financial markets. As the industry awaits further developments, the race for regulatory approval for spot Ethereum ETFs continues, with major players vying for a strategic position in the evolving landscape of cryptocurrency investments.