The SEC gave Ethereum ETF applicants a cold shoulder at its meeting, dashing hopes of approval in May.
Reuters reported on April 25, citing industry sources, that the U.S. SEC is expected to reject several applications for exchange-traded funds (ETFs) based on Ethereum, the world’s second-largest cryptocurrency.
The decision, expected in May, follows recent discouraging interactions between ETF issuers and the SEC.
Notably, companies like VanEck and ARK Investment Management have filed applications with the SEC for ETFs that directly track the spot price of Ether.
Agency decisions on these applications, of which VanEck and ARK are the first, are due May 23 and May 24, respectively.
cold shoulder
Participants in recent meetings with the SEC described the talks as one-sided, with agency staff withholding substantive comments on the proposal. This stands in stark contrast to the detailed discussions prior to the SEC’s approval of a spot Bitcoin ETF earlier this year.
Under the leadership of Gary Gensler, a well-known cryptocurrency skeptic, the SEC has historically taken a cautious stance, citing concerns about market manipulation. However, the approval of a spot Bitcoin ETF earlier this year raised hope among cryptocurrency supporters after Grayscale Investments won a court victory against the SEC.
ETF issuers have argued that approval for both spot Bitcoin ETFs and Ethereum futures-based ETFs should logically extend to spot Ethereum products.
Despite efforts to resolve regulatory concerns, the SEC’s informal stance at recent meetings led many to expect a rejection, the report said.
regulatory uncertainty
Todd Rosenbluth, head of ETF analysis at VettaFi, told the newswire that continued regulatory uncertainty could delay approval until late 2024 or later. Meanwhile, issuers like VanEck are planning additional disclosures to maintain dialogue with the SEC.
The potential rejection is already having an impact on the cryptocurrency market. Hong Fang, CEO of cryptocurrency exchange OKX, pointed out that although the price of Ethereum has risen this year, it is lagging behind Bitcoin’s increase. This appears to have been influenced by market expectations about the SEC’s decision.
The SEC’s hesitation may be due to the perception that more comprehensive market data on Ether is needed. Recent speculations suggest that regulators have launched an investigation into the Ethereum Foundation through Swiss authorities.
