The US Securities and Exchange Commission (SEC) is set to make a crucial decision this week on whether to approve VanEck’s proposal for a spot Ethereum ETF. This decision, scheduled for May 23, could come down to a single pivotal vote, much like SEC Chairman Gary Gensler’s January vote approving spot Bitcoin ETFs. The same five commissioners will be casting their votes, and their individual views on cryptocurrency might give clues about the outcome.

Key SEC Members and Their Views on Cryptocurrency

One of the commissioners, Hester Peirce, often called “Crypto Mom” for her supportive stance on digital currencies, has a history of backing cryptocurrency initiatives. Although her vote on the Ethereum ETF is not confirmed, her engagement with the Ethereum community and frequent criticisms of the SEC’s strict regulatory measures suggest she might be in favor.

In contrast, Commissioner Caroline Crenshaw has been a vocal critic of the crypto industry. She opposed the approval of spot Bitcoin ETFs due to concerns over market manipulation and inadequate regulation. Given her consistent stance, it is likely she will vote against the Ethereum ETF.

Commissioner Mark Uyeda, who has also criticized the SEC’s regulatory methods, voted to approve spot Bitcoin ETFs despite his reservations. While his decision on the Ethereum ETF remains uncertain, his previous support for Bitcoin ETFs hints that he might lean towards approval.

Jaime Lizarraga, another SEC member, has opposed spot Bitcoin ETFs and questioned the role of cryptocurrencies in financial inclusion. Viewing most digital assets as securities that operate illegally, he is expected to vote against the Ethereum ETF.

Chairman Gary Gensler, who approved spot Bitcoin ETFs possibly influenced by Grayscale’s successful appeal against the SEC, has not clearly defined his position on the Ethereum ETF. His stance on Ethereum’s regulatory status is ambiguous, and he is under pressure from an ongoing investigation regarding Ethereum's classification.

Possible Outcomes and Market Effects

Chairman Gensler’s vote is seen as particularly significant and possibly decisive. The SEC’s stance on spot Ethereum ETFs is closely watched, with mixed signals emerging from the commission. Some investment managers are predicting a rejection due to the SEC’s relatively lower engagement compared to spot Bitcoin ETF applications.

Bloomberg analysts Eric Balchunas and James Seyffart estimate a 25% chance of approval for at least one spot Ethereum ETF on May 23, a significant drop from the 70% likelihood at the beginning of the year.

The SEC’s decision will have major implications for the cryptocurrency market. An approval could validate Ethereum as a legitimate investment asset, much like the approval of the spot Bitcoin ETF did for Bitcoin. Conversely, a rejection would intensify regulatory challenges for cryptocurrencies in the US.