The U.S. Securities and Exchange Commission's approval of eight spot Ethereum ETFs has sparked a new cryptocurrency debate over what “approval” actually means.
At least, that's the debate raging on Polymarkets after crypto enthusiasts bet more than $13 million that the SEC would approve an Ethereum ETF by May 31.
As anticipation of the SEC’s approval of the first Bitcoin ETF reached a fever pitch on January 9, public betting began. The fundamental questions that govern the possibility of an Ethereum ETF being approved are whether Ethereum is a security or a commodity, and whether Bitcoin has paved the way for Ethereum.
Financial analysts and cryptocurrency commentators have made periodic predictions, but they have become increasingly pessimistic as the SEC has taken aggressive steps against other crypto projects. As the May deadline for a decision becomes more certain, some have suggested the delay is actually a good thing. Last month, JPMorgan put the chances of approval at 50%.
PolyMarket users are placing bets on the question: “Will an Ethereum ETF be approved by May 31?” Image: PolyMarket
But the mood began to shift last week. Coinbase opined last week that an Ethereum ETF would become a reality, and when two Bloomberg ETF analysts revised their odds of approval from 25% to 75% on Monday, the price of ETH began to soar.
Bettors at PolyMarket were also taking notice. On Monday, the site saw its overall odds of SEC approval jump from 13% to more than 50%. Optimistic bettors rejoiced on Thursday when the SEC announced that it would approve the spot Ethereum ETF application. Was the answer to whether an Ethereum ETF would be approved by May 31 a resounding “yes”?
Many people argued that there was no need to rush things.
“It's a shame the actual terms of the bet aren't clear, $11 million was at stake,” wrote Twitter user Observoor. “I checked it this afternoon and thought: 'This doesn't even define what ETF approval means…this is going to be a huge fight.'”
Technically, the SEC has approved rule changes to allow large investment firms like Grayscale, BlackRock, Fidelity, and VanEck to go ahead with their filed and amended plans to offer spot Ethereum ETFs, but these specific funds have yet to be approved, and that process could take more than a week, potentially putting them past the May 31 PolyMarket deadline.
Some criticised the bet as “rigged”, with nearly 1,000 comments posted on the event page.
“Let's be realistic. A lot of people were overconfident that the SEC would reject it, and are now accusing the SEC of turning around and attacking them,” wrote a Polymarket user. “ETH ETF approved… [by] A trusted journalistic consensus.”
“The best solution would be to make it a 50/50 split and make it clear that the rules weren't good enough to pick a clear winner,” suggested another PolyMarket user.
Meanwhile, the language of the SEC's decision was clear: “The Order grants expedited approval to the Proposal.”
“To all of you who don't own stocks and are disgruntled: show the market rules and PolyMarket's solution to any SAT/GMAT language professor and ask what he would say. Hint: PolyMarket is basic reading comprehension so everyone would agree,” wrote a PolyMarket user.
PolyMarket users were given the opportunity to dispute the outcome of their bets, but by 8:18pm ET their votes were finalized. For many, the simplest answer was always the best answer.
“I'm a Polymarkets investor and a lover of prediction markets, so I have no influence on the final resolution,” Polymarkets investor Nick Tomaino wrote on Twitter, “But in my opinion, for any prediction market platform to be successful in the long term, it's important that it settles in the spirit of the market, otherwise the public won't trust it.”
With the big bet settled, the cryptocurrency market as a whole just kept moving. Ethereum's price barely budged following the news of the approval, but has since risen nearly 30 percent in a week, surging to $3,937 intraday and trading at $3,819 as of press time.
Launched in 2020, Polymarket is a blockchain-based prediction market platform where users can bet tokens to earn profits on the outcomes of current events such as elections, sports, and current events. Earlier this month, Polymarket announced it had raised $70 million from funding participants including Ethereum co-founder Vitalik Buterin.
Editor: Ryan Ozawa.
