Breaking Down the Ethereum ETF Approval Roadmap with Finance Expert Scott Johnsson

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As cryptocurrency enthusiasts and investors eagerly await the potential approval of a spot Ethereum ETF, Scott Johnsson, a finance lawyer and the General Partner and General Counsel at Van Buren, provides a comprehensive analysis titled  “The Road Ahead: A ETH Spot” in a series of Twitter threads.

Part 1 – General Roadmap 

Johnsson outlines a four-step roadmap for approving a spot ETF, drawing parallels to the successful journey of Bitcoin ETFs. The process involves obtaining a DCM Futures Listing, progressing through ’40 Act Futures ETF, ’33 Act Futures ETF, and finally achieving the coveted spot approval. 

The analysis begins with a historical BTC spot ETF approval timeline, highlighting crucial milestones such as the CME Bitcoin Commodity Futures Listing in December 2017 and the recent spot ETF approval in January 2024. Johnsson emphasizes the significance of a DCM Futures Listing as a prerequisite for any spot ETF.

Part 2 – Threshold Issue & Grayscale

In Part II, Johnsson addresses Section 6(b)(5) of the Exchange Act, a roadblock for BTC and potential ETH spot ETFs. He delves into the Grayscale ruling’s impact on the SEC’s approach, mainly focusing on the “significant size” test and Surveillance Sharing Agreement (SSA).

Part 3 – BTC 19b-4 Approval Order

The third part explores in detail the SEC’s approval order for BTC spot ETFs, unraveling the reasoning behind addressing the “potential fraud and manipulation” concern outlined in Section 6(b)(5). Johnsson analyzes five key points from the order, highlighting the SEC’s sidestepping of the “significant size” test.

Part 4 – ETH Analysis

Moving to Part IV, Johnsson applies the insights from BTC to speculate on the potential approval of an ETH spot ETF. He points out the optimistic perspective, emphasizing the SEC’s expressed correlation-based rule for approval. However, he cautions about potential headwinds and the impact of ongoing regulatory actions against platforms like Coinbase and Binance.

In response to his concluding post, a follower questioned the estimated timeline for spot ETH ETF approval, if not in May. Johnsson answered, suggesting another year, maybe two, anticipating the need for the early period of the ETH futures market to roll off from the sample period.

In Conclusion

Scott Johnsson’s detailed threads have provided a comprehensive roadmap analysis to spot Ethereum approval.  His intricate detailing helps us understand every step of regulatory approval that tends to repeat itself repeatedly.