SEC Expected to Deny Ethereum ETFs, ETH Price Drops 5% 😱

SEC Anticipated Denial

According to a recent report by Reuters, various issuers of US Bitcoin ETFs are bracing themselves for the Securities and Exchange Commission (SEC) to deny their applications for launching ETFs tied to Ethereum’s price.

Expectations for the denial have been fueled by discouraging meetings between the applicants and the regulatory agency in recent weeks, as revealed by sources familiar with the matter.

High-profile Applicants

Prominent investment firms like VanEck, ARK Investment Management, and seven other issuers have filed applications with the SEC to list ETFs tracking Ethereum’s spot price.
VanEck and ARK are the first in line, with decisions expected by May 23 and May 24, respectively.

One-sided Discussions

Sources involved in the meetings between Bitcoin ETF issuers and the SEC reported one-sided discussions with the agency not engaging in substantive details about the proposed products.
This differs from the detailed discussions that took place before the SEC’s approval of spot Bitcoin ETFs in January.

Arguments and Concerns

During the meetings, issuers argued that the approval of spot Bitcoin ETFs and Ethereum futures-based ETFs had set a precedent for spot ETH products.
Efforts were made to address potential regulatory concerns; however, the SEC staff did not clarify specific concerns, hinting at possible rejections.

Crypto Industry Setback

If the expected denials materialize, it would be a setback for the cryptocurrency industry, which had hoped that the approval of spot Bitcoin ETFs would pave the way for similar products and contribute to mainstream cryptocurrency adoption.

Todd Rosenbluth, head of ETF analysis at data firm VettaFi, stated that the delay in approval or rejection has left the regulatory landscape uncertain.

Some issuers plan to submit additional disclosure paperwork to continue conversations with the SEC, but the prevailing sentiment suggests likely rejections.
VanEck’s CEO anticipates rejection, while ARK Investment Management has not commented on the matter.

Potential Legal Battles

Applicants expect the SEC to cite broader issues such as the depth of statistical data on the underlying ETH market for ETF rejections.
Industry insiders speculate that rejecting Ethereum ETFs could spark potential court battles as parties seek legal recourse.

Impact on Ethereum’s Price

The anticipation of rejection has already influenced Ethereum’s price, with market participants factoring in the likelihood of a negative outcome.
Ethereum is currently trading at $3,100, reflecting a persistent downtrend over broader time frames.