US SEC Delays Decision on Ethereum ETFs
The US Securities and Exchange Commission (SEC) has announced a delay in its decision regarding the approval of spot Ethereum exchange-traded funds (ETFs) from Hashdex and Ark 21Shares. This means that both products will remain on hold until a final decision is made by the SEC in late May. The deadline for Ark 21Shares is May 24, while Hashdex will receive its decision on May 30. However, the first final deadline is for the VanEck spot ETH ETF, which is set for May 23 and will set the precedent for other ETFs.
No Approvals Expected for Spot ETH ETFs
The recent series of SEC postponements has dashed hopes among industry experts for the approval of spot Ethereum ETFs in May. Bloomberg ETF analyst James Seffart stated that he had changed his cautiously optimistic attitude towards ETH ETFs, believing that they will ultimately be denied in this round. He also highlighted that the SEC has not engaged with issuers on Ethereum specifics, which is different from the situation with Bitcoin ETFs.
ETF Store President Nate Geraci commented that the lack of engagement from the SEC with issuers is not a good sign. However, he mentioned that the regulator is not completely disengaged as it recently met with Coinbase and Grayscale attorneys to discuss this topic. Geraci also pointed out that issuers are still amending their filings, such as Fidelity’s recent amendment to include ETH staking.
Bloomberg ETF analyst Eric Balchunas echoed these sentiments, stating that until issuers confirm that the SEC has reached out to them, approval for spot Ethereum ETFs will remain in serious doubt. Balchunas also lowered his May approval odds from 70% in January to 35%.
ETH Price Plunges
Currently, there are eight ETF issuers seeking approval for spot Ethereum ETFs, including BlackRock, Grayscale, Fidelity, Invesco Galaxy, VanEck, Hashdex, Ark 21Shares, and Franklin Templeton. Grayscale may face issues if its ETHE fund gets converted to a spot ETF, as there could be a significant exodus from the fund due to better yields available elsewhere. As a result of these developments, the price of ETH experienced a further 7.7% decline in a single day, dropping to $3,122 and marking a 23% decrease from its high in 2024.
Hot Take: Approval Uncertainty Casts Shadow on Spot ETH ETFs
The recent delays in the SEC’s decision on spot Ethereum ETFs have created uncertainty and diminished hopes for their approval in May. Industry experts are now skeptical about the likelihood of these ETFs being approved, especially considering the lack of engagement between the SEC and issuers on Ethereum-specific matters. While the regulator has met with attorneys from Coinbase and Grayscale, it remains unclear whether this will lead to any positive developments for spot ETH ETFs.
Furthermore, the downward trend in ETH prices following these delays reflects the market’s reaction to the uncertain outlook for spot Ethereum ETFs. Investors are concerned about the potential denial of these ETFs and are reevaluating their positions in ETH-related funds. The future of spot Ethereum ETFs remains uncertain until the SEC provides further clarity on its decision-making process.
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