As someone who closely follows the crypto industry and has been observing the regulatory landscape for Ethereum ETFs, I share the skepticism expressed by experts regarding the approval of Ethereum spot ETFs in the near future. The lack of substantive engagement from the SEC during meetings with aspiring issuers is a concerning sign, especially when compared to the collaborative process leading up to Bitcoin spot ETF approvals.
As an observer, I’ve noticed that crypto industry insiders have expressed their doubts about the approval of Ethereum (ETH) spot Exchange-Traded Funds (ETFs) for public trading by regulatory bodies in the coming month.
If a denial occurs, US investors may not have access to the digital currency product before December 2024 at the very latest. Consequently, this digital currency would trail significantly behind Bitcoin (BTC) in its acceptance by the financial sector on Wall Street.
Why Are Ethereum ETFs Unlikely?
According to sources who spoke with Reuters, the SEC’s interactions with prospective Ethereum ETF creators have reportedly been characterized as one-sided.
The team at the agency has yet to go into depth regarding the potential products with VanEck and ARK, although their application deadlines are approaching within a month.
In simpler terms, the regulatory process before approving Bitcoin spot ETFs in January was quite different. Instead of quick decisions, sponsors worked closely with regulators for extended periods to clarify specific aspects such as redeeming assets in kind or in cash.
“According to Todd Rosenbluth, the head of ETF analysis at VettaFi, it appears that approval is more likely to be postponed until late in 2024, or even beyond.” He further added, “The regulatory situation remains unclear.”
I’ve observed that according to reports, the rationale put forward by ETF issuers for gaining approval centers around the listing of Ethereum futures ETFs in October. They argue that this paves the way for other Ethereum-based investment products to be deemed secure enough for public marketplaces, thereby setting a significant precedent.
The points made in this case bear a strong resemblance to those Grayscale raised when they took legal action against the SEC over their denials of Bitcoin spot ETF applications in 2022. Grayscale’s triumph in that lawsuit the following year significantly influenced the SEC’s decision to approve such ETFs.
Instead of directly asking follow-up questions, the SEC often gave no response or implied skepticism towards the applications, potentially indicating a predisposition to reject them.
Will There Be Another Lawsuit?
“According to one source, it’s feasible that we’ll eventually have ether ETFs (Exchange Traded Funds). However, this may not happen until after someone is rejected and takes legal action.”
Recently, Eric Balchunas of Bloomberg ETF Analysis expressed an opinion that Grayscale might choose to avoid funding another legal dispute due to the limited potential financial gains for them in such a scenario.
“He expressed doubt back then about investing substantial resources in something with potentially limited returns.”
The Securities and Exchange Commission (SEC) chairperson expresses skepticism towards cryptocurrencies on a personal level, arguing that they offer limited distinct applications beyond illegal financial transactions, and essentially follow a centralized structure.
I’ve observed that Bitwise Chief Investment Officer Matt Hougan has suggested a potential explanation for the Securities and Exchange Commission (SEC) denying an Ethereum Exchange-Traded Fund (ETF). He hypothesized that the SEC might justify its decision by stating that it hasn’t had ample time to thoroughly review the product.
“In my opinion, they may be pushing it back for technical reasons to gather additional information.”
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2024-04-25 21:45