Several asset giants, including BlackRock and Fidelity, are currently vying for a spot on Ethereum (ETH). Exchange-traded fund (ETF) on the American market. While many crypto investors are very excited about this idea, global financial information and analysis company S&P Global speaks of a large potential risk.
Risks of Ethereum Concentration
Analysts at S&P Global warned last Tuesday about the potential danger that an Ethereum spot ETF could pose if approved by the US Securities and Exchange Commission (SEK).
Such an exchange fund could bring with it new concentration risks, the analysts write.
Unlike Bitcoin, Ethereum is a Proof of use (PoS) network. It means that Validatorsinstead of miners, validate transactions and add new transaction blocks to the blockchain.
Perhaps the proposed Ethereum spot ETFs could use some of the stored Ether to participate in the consensus mechanism. ARK Invest and 21Shares, who want to jointly launch an Ethereum spot ETF, even submitted an application for it at the beginning of the month.
S&P Global analysts say this could potentially lead to a more centralized Ethereum network, with one party controlling a very large portion of all ETH and using it to validate the network.
“U.S. spot Ether ETFs that include staking could grow large enough to alter validator concentrations on the Ethereum network, for better or worse,” it said.
Analysts expect the financial regulator to give the green light to Ethereum spot ETFs in May this year, the first deadline for approving such funds.
The crypto exchange Coinbase is campaigning
Earlier today you could also read that the American crypto exchange Coinbase explained in a 27-page document to the SEC why it should approve an Ethereum spot ETF.
The main focus is on the categorization of ether as a commodity and not as an effect. The concentration risk mentioned above has also been eliminated.
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