Jay Clayton, the former chairman of the US Securities and Exchange Commission (SEC), has expressed his belief that Ethereum exchange-traded funds (ETFs) will ultimately be traded, despite some lingering questions and uncertainties surrounding the product. Clayton broke down the SEC's decision regarding spot Ethereum ETFs and the next steps in an interview with CNBC.

According to Clayton, the approval process for Ethereum ETFs occurs in two stages. The first stage involves listing approval, which has already been granted, and the second stage involves product approval, which is still pending. Before trading can begin, the funds' registration statements must be approved, providing transparency and essential information for potential investors.

Clayton is confident that the approval of Ethereum ETFs is "inevitable," drawing parallels with the approval process for Bitcoin ETFs. However, he acknowledged that some questions still need to be addressed, particularly regarding the classification of Ethereum as a security or commodity.

Clayton highlighted the significant development of spot markets for both Bitcoin and Ether over time, with trading volumes reaching all-time highs in mid-2021 and March 2024 being the third-highest month. He also noted the distinction between Bitcoin and Ether, with the former being classified as a commodity by the Commodity Futures Trading Commission (CFTC) and current SEC Chairman Gary Gensler, while the latter's status remains unclear.

The former SEC chairman explained that the difference between a commodity and a security lies in whether investors rely on others for the investment's value growth. Using the analogy of a Broadway ticket, Clayton illustrated that if a show is still in development, the ticket is a security, but once the show is produced and the work is done, the ticket becomes a commodity.

Clayton's comments suggest that Ethereum ETFs are likely to be approved, but some uncertainties remain. Estimates predict that trading could begin as early as July or August, with JPMorgan speculating that it will happen well before November. As the market continues to evolve, clarity on these issues will be crucial for investors and the industry as a whole.