SEC may reject Ethereum Spot ETF in May: Reuters

Crypto industry experts believe the Ethereum (ETH) Spot ETF will likely be denied approval for public trading by regulators next month.

If rejected, U.S. investors likely won't receive such products until December 2024 at the earliest, leaving the digital currency far behind Bitcoin (BTC) in terms of Wall Street adoption. will be taken.

Why is Ethereum ETF unlikely?

Contact information source Reuters It says several meetings between the Securities and Exchange Commission (SEC) and aspiring Ethereum ETF issuers have been one-sided.

Despite the application deadline coming from VanECK and ARK in less than a month, agency staff have not discussed substantive details about the proposed product.

This is in sharp contrast to the internal conversations that preceded the approval of the Bitcoin Spot ETF in January, during which regulators focused on details such as whether sponsors would receive in-kind or cash redemptions. spent several months helping them fine-tune their application.

“Approval is likely to be delayed until late 2024 or longer,” said Todd Rosenbluth, head of ETF analysis at Bettafi. “The regulatory landscape still appears cloudy.”

The ETF issuers' arguments in favor of approval primarily revolved around the October listing of an Ethereum futures ETF, which set a precedent that ETH-based investment products were safe enough for public markets, the people said.

These claims mirror those made when Grayscale sued the SEC in 2022 over the rejection of its Bitcoin Spot ETF. Grayscale's landslide victory in that case a year later prompted regulators to approve ETFs.

However, the SEC generally did not raise specific counter-questions, indicating that it was not seriously considering the application and intended to deny it in any event.

Will there be another lawsuit?

“There is a good chance that an Ether ETF will eventually appear,” said one source. “But not until someone gets rejected and goes to court.”

Earlier this month, Bloomberg ETF analyst Eric Balchunas suggested that Grayscale may not want to fund new litigation because the potential financial reward would be smaller.

“This costs a lot of time and money for what may only yield a fraction of a parrot,” he wrote at the time.

The SEC chairman has publicly criticized cryptocurrencies in his personal capacity, arguing that they have few unique use cases outside of illegal financial activities and are fundamentally centralized. .

Bitwise Chief Investment Officer Matt Hogan said the SEC could justify rejecting the Ethereum ETF by saying it had little time to review the product.

“I think the mechanical reason it gets pushed out is because they just want to see more data.”