- According to a recent investigation, the SEC was considering classifying ETH as a security.
- There were concerns about a lack of communication between applicants and regulators.
Bitcoin [BTC] Ethereum, the second largest cryptocurrency, may have seen the light of day [ETH]widely anticipated spot exchange-traded funds (ETFs) may not be so lucky to be approved in the US
Will there be an ETH spot ETF in May?
Alex Thorne, head of research at Galaxy Digital, said it was “very unlikely” the ETF would be approved by May, the deadline for the initial list of ETF applications.
This pessimistic prediction stems from the unfriendly stance taken by the U.S. Securities and Exchange Commission (SEC), which was reviewing numerous applications for ETH ETFs.
Are SEC and ETH at odds?
The biggest driver of negative sentiment was a recent report by Fortune, a global business media company, which revealed a major push by the SEC to classify Ether as a security.
Fortune reported that regulators have sent subpoenas to multiple companies in recent weeks as part of an investigation into the Ethereum Foundation, a nonprofit organization that supports Ethereum and related technologies.
The SEC's stance on ETH is vague, with executives including SEC Chairman Gary Gensler carefully avoiding the topic of whether ETH is a security or a commodity.
This ambiguity is likely also reflected in the lack of dialogue between ETF applicants and regulators, which was also previously highlighted in AMBCrypto's report. This was quite different from the approval process for Bitcoin ETFs, where the SEC regularly engages with issuers.
Back in January, British multinational bank Standard Chartered expected the Ether ETF to be approved by May 23, the final deadline for the initial list of applications. But with each passing day, the chances of approval grew smaller.
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Meanwhile, the SEC postponed a decision on whether to approve an ETH futures ETF by Grayscale, the world's largest digital asset management company. It should be noted that the investment giant was also awaiting a decision on the application to convert the ETH Trust (ETHE) into a spot ETF.
At the time of writing, ETH is trading at $3,347 and has been under heavy selling pressure in recent weeks, according to CoinMarketCap.
