The SEC is expected to reject a spot Ethereum ETF in its upcoming decision, sending the price of ETH down 5%.

In the last 24 hours, Ethereum (ETH), the second largest cryptocurrency by market capitalization, has experienced a significant 5% rise. price drop. The drop comes amid growing speculation that the highly anticipated Ethereum ETF will likely be rejected by the U.S. Securities and Exchange Commission (SEC) at its upcoming deadline in May.

U.S. Bitcoin ETF issuers brace for expected rejection by SEC

Depending on the According to a recent Reuters report, various US Bitcoin ETF issuers and companies expect the SEC to reject their applications to launch ETFs linked to the price of ETH.

Those expectations have been bolstered by “disheartening meetings” between applicants and regulators in recent weeks, as revealed by four individuals familiar with the matter.

Prominent investment firms such as VanEck, ARK Investment Management and seven other issuers have filed with the SEC to list an ETF that will track the spot price of Ethereum.

First-line VanEck and ARK applications must receive SEC decisions by May 23 and May 24, respectively.

Sources who participated in the meeting Bitcoin ETF The issuer and the SEC reported that discussions were primarily “one-sided” and that agency staff did not engage in substantive details about the proposed product.

This stands in stark contrast to the intensive and detailed discussions between issuers and institutions prior to the SEC’s landmark approval of a spot Bitcoin ETF last January.

Issuers argued at the meeting that the SEC’s approval of a spot Bitcoin ETF and an Ethereum futures-based ETF last October set a precedent for spot. ETH products. They also worked to resolve potential regulatory issues.

Despite their claims, the report found that SEC staff did not clarify their specific concerns or engage in meaningful dialogue, further suggesting they are likely to deny the request.

Frustration in the cryptocurrency industry

If these expectations are realized, it would be a setback for the cryptocurrency industry, which had hoped the approval of a spot Bitcoin ETF would pave the way for similar products and contribute to their mainstreaming. quantum of cryptocurrency.

Approval or rejection is likely to be delayed until late 2024 or later, creating an uncertain regulatory environment, according to Todd Rosenbluth, head of ETF analysis at data firm VettaFi.

Some issuers have expressed a desire to file additional public filings to continue talks with the SEC, but overall sentiment indicates a growing belief that the filings will be made public. rejected.

VanEck CEO Jan van Eck has already stated that the company’s application is likely to be rejected, while ARK Investment Management has yet to comment on this.

Rejected Ethereum ETF Could Spark Potential Court Battle

Several applicants expect the SEC to cite broader issues, such as the nature and depth of statistical data on the underlying ETH market, as reasons for its decision when rejecting the ETF.

Matt Hougan, chief investment officer at Bitwise Asset Management, which has applied for a position in the Ethereum ETF, believes the SEC may need more time to observe. Ethereum Futures And we collect additional data.

Industry insiders are speculating that rejecting an Ethereum ETF could potentially lead to legal action, with one source suggesting the courts could intervene before an Ethereum ETF eventually becomes a reality.

The expected rejection has already impacted the price of Ethereum, with Hong Fang, chairman of cryptocurrency exchange OKX, saying the cryptocurrency is under downward pressure as market participants consider the possibility of a negative outcome.

Currently, ETH is trading at $3,100, further highlighting the cryptocurrency’s ongoing downward trend over the broader period. Over the past 14 and 30 days, the token has experienced significant declines of 12% and 14% respectively.

Featured image from Shutterstock, chart from TradingView.com

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