A Difficult Road Ahead for Spot Ethereum ETFs as SEC Delays Decision
Multiple issuers are competing to launch spot Ethereum ETFs following the successful introduction of spot Bitcoin products. However, recent delays by the U.S. Securities and Exchange Commission (SEC) and comments from commissioners suggest that the path to approval may be challenging.
Ethereum ETF Meeting Scheduled
The SEC and applicants for spot Ethereum (ETH) ETFs are set to meet next month to discuss the proposals for Ether-based investment vehicles. While there is no official confirmation on the SECโs public log, sources familiar with the matter have revealed this information.
The decisions on spot ETH products have been postponed until at least May, with VanEckโs filing being the first in line. The SEC has until May 23 to accept or reject VanEckโs bid, while other issuers like BlackRock, Franklin Templeton Grayscale, and Invesco Galaxy await a response.
Spot Ethereum ETF Bids Filed Last Year
Spot ETH ETF bids were submitted last year shortly after issuers applied for spot Bitcoin ETFs. The SEC approved the Bitcoin (BTC) products, and trading for nearly a dozen funds began on January 11.
This approval came after many years of rejection by the securities watchdog, with concerns about market manipulation being the primary reasons for denial. During this time, the SEC also approved futures-based crypto products. However, a three-judge panel later deemed this decision โarbitrary and capriciousโ during a Grayscale lawsuit against the SEC.
This ruling is considered a turning point in the battle to legitimize crypto adoption and investment in the U.S., as it paved the way for spot BTC ETFs to be authorized a few months later.
Differences Between Bitcoin and Ethereum
Experts have pointed out that spot ETH ETFs may face a different review compared to their BTC counterparts. The SECโs view of Bitcoin as a non-security commodity was expressed by SEC Chair Gary Gensler after the approval of spot BTC ETFs. However, the security designation of Ethereum remains ambiguous.
Additionally, Bitcoin and Ethereum operate on different technological models. Bitcoin uses proof-of-work, while Ethereum transitioned to a proof-of-stake design in 2022. The SEC has often scrutinized the staking process used by Ethereum, suggesting that existing financial policies are sufficient for overseeing crypto assets.
Furthermore, unlike with spot BTC ETFs, the SEC has not engaged in dialogue with issuers regarding spot ETH ETFs. While all five commissioners will vote on the bids, Gensler has emphasized that previous decisions do not indicate a blanket endorsement of cryptocurrencies.
Commissioner Hester Peirce has stated that the SEC should not require a court case to make a decision, while Grayscale CEO Michael Sonnenshein has expressed uncertainty about whether the company will have to sue the SEC again.
Calls for Approval and Market Impact
Crypto industry stakeholders, including Coinbase, have urged the SEC to approve Grayscaleโs spot ETH ETF application. This application seeks to convert a $7 billion trust into an exchange-traded fund. Coinbase has also petitioned the SEC for more transparent crypto regulations.
The anticipation surrounding spot ETH ETFs tracking spot prices has contributed to a 42% increase in ETHโs value over the past 30 days according to CoinMarketCap. Grayscale experts believe that this rally is partly due to hype surrounding the spot ETH ETFs, but it is also influenced by anticipation surrounding the Dencun upgrade.
๐ฅ Hot Take: Spot Ethereum ETFs Face Uphill Battle with SEC Delays and Uncertainties
The road to launching spot Ethereum ETFs is proving to be challenging due to delays and uncertainties from the SEC. Hereโs what you need to know:
SEC Meeting with Spot ETH ETF Applicants
The SEC plans to meet with applicants for spot Ethereum ETFs next month to discuss their proposals. While details are not publicly available, sources familiar with the matter have confirmed this meeting.
Delays and Pending Decisions
The SEC has delayed decisions on spot ETH ETFs until at least May, with VanEckโs bid being the first in line. The commission must accept or reject VanEckโs application by May 23, while other issuers eagerly await their responses.
Differences Between Bitcoin and Ethereum
The SECโs view of Bitcoin as a non-security commodity contrasts with the ambiguous security designation of Ethereum. Additionally, the technological models of both blockchains differ, which may impact how the SEC reviews spot ETH ETFs.
Lack of Dialogue and Uncertain Outcome
Unlike with spot BTC ETFs, the SEC has not engaged in dialogue with issuers regarding spot ETH ETFs. While all five commissioners will vote on the bids, previous decisions do not guarantee a favorable outcome for crypto assets.
Calls for Approval and Market Impact
Crypto industry stakeholders, such as Coinbase, have urged the SEC to approve Grayscaleโs spot ETH ETF application. The anticipation surrounding spot ETH ETFs has contributed to a significant increase in ETHโs value over the past month.
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