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St. Moritz, SWITZERLAND — U.S. Securities and Exchange Chair Gary Gensler fired warning shots to the crypto industry, casting doubt over whether digital coin ether would follow next in the footsteps of bitcoin to receive approval for an exchange-traded fund.

After the bitcoin ETF approval, prices for ether — the token linked with Ethereum — spiked to their highest level since May 2022.

That was because investors are betting on an ether — or ETH — ETF to be rubberstamped by the SEC next. The agency is due to give decisions on spot ETH ETF applications beginning in May. BlackRock, Invesco, Ark and VanEck are among the firms in line for approval, as well as Grayscale.

The SEC has long been an opponent of cryptocurrencies, and its bitcoin ETF approval in no way changed its stance in a big way. After the ETF decision, Gensler issued a statement in which he called bitcoin “speculative” and said it could be used for “illicit” purposes.

One comment poured cold water over hopes of an ETH ETF.

“Importantly, 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,” Gensler said Wednesday after the SEC decision on the ETFs.

Crypto as commodities or securities?

A long-running debate in the U.S. is over whether cryptocurrencies are classified as securities or as commodities. Key to Gensler’s comments was his reference that bitcoin’s status as a “non-security commodity” was one of the reasons why the SEC was comfortable approving the ETF.

Gensler made clear that “the vast majority of crypto assets are investment contracts and thus subject to the federal securities laws,” in the SEC’s view.

This complicates matters for an ETH ETF.

“One distinction which I think people have to look at which is that bitcoin clearly has been bucketed as a commodity, Ethereum, there’s still some question. Is it a security? Is it a commodity? And I think until that’s resolved, it cannot be look at exactly like the bitcoin product, in terms of how do you structure and ETF around it,” Bill Tai, chairperson of Aktai, told CNBC in an interview at the Crypto Finance Conference in St. Moritz.

Tai said that approving an ETH ETF is “not as clear cut” as was the case of bitcoin.

“I do think that it’s not out of the range of possibility, but there are additional factors to consider around that one because of its classification,” Tai said.

Securities and commodities are regulated under different laws and by different agencies.

Will an ETH ETF happen this year?

Commentators are split on when an ETH ETF may come to the market. Some, like Antoni Trenchev, co-founder of cryptocurrency exchange Nexo, think it will happen this year.

“I’d watch what the SEC does and not what it says, because it wasn’t long ago that the prospect of a spot Bitcoin ETF seemed like a distant dream. Things move very fast in crypto and investors are front-running what they believe to be the next big spot ETF approval,” Trenchev told CNBC by email.

“You’d have to say now that bitcoin has knocked down the door it’s only a matter of when not if others will follow  — most likely in 2024 — and ETH is definitely the leader of the pack.”

Christopher Giancarlo, co-founder of the digital dollar project and former chair of the U.S. Commodity Futures Trading Commission, oversaw the introduction of bitcoin futures in 2017. He said that, in his experience at the regulator, the approval of one product opens the doors for others.

“Once we greenlighted bitcoin futures, there as a tremendous movement in the CFTC jurisdiction area for greenlighting ethereum futures and that did come 18 months later,” Giancarlo told CNBC on Thursday.

He added that he would be “shocked” if there weren’t growing demand for an ether ETF.

“The SEC’s going to have deal with the growing demand for that product,” Giancarlo added.

Others are a little more skeptical that the SEC could approve an ETH ETF in the short term.

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“As long as [Gensler]’s in power, it’s less likely [that a ETH ETF gets approved], frankly, but I do think it’s eventually likely,” Anthony Scaramucci, founder of SkyBridge Capital, told CNBC on Thursday.

“He’ll probably block ETH. But that doesn’t mean ETH isn’t coming. I think it just requires patience. It may be early on that trade, but ETH is here to stay as well.”

– CNBC’s Tanaya Macheel contributed to this report.

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