Doubts Over Spot Ethereum ETF Approval in 2024
Jake Chervinsky, Chief Legal Officer of Variant, a cryptocurrency company, has expressed skepticism about the approval of a spot Ethereum (ETH) ETF this year. Chervinsky believes that while an ETF could potentially boost the cryptocurrency market, there are several factors that may influence the decision-making process of the Securities and Exchange Commission (SEC), making it less likely for an Ethereum ETF to be approved.
SEC Under Pressure and Market Instability
Chervinsky points out that despite previous successes with Bitcoin ETFs, the SEC is currently facing mounting political pressure and operating in a market that is experiencing significant volatility. These factors could impact the SEC’s decision on approving an Ethereum ETF.
Chervinsky highlights the following key points:
- The SEC faced criticism for approving Bitcoin ETFs due to political blowback.
- An Ethereum ETF could further amplify the current market frenzy driven by animal spirits.
- The SEC may have legal justifications to reject an Ethereum ETF, even if they are unfounded.
- The SEC has previously supported controversial legal stances to achieve political objectives.
Chervinsky also suggests that BlackRock’s success in obtaining ETF approvals can be attributed to their ability to exert pressure and maintain a collaborative relationship with the SEC. He predicts that if the regulator were to request BlackRock and other Ethereum ETF sponsors to withdraw their applications, they would likely comply. However, despite his skepticism about the timeline, Chervinsky believes that it is only a matter of time before an Ethereum ETF is approved.
Reassessing Predictions: May Approval Becomes Uncertain
While some analysts initially estimated a high chance of spot Ethereum ETF approvals in May, recent developments have led to reassessment.
Key points:
- Bloomberg ETF Analyst James Seyffart initially estimated a 60% chance of spot Ethereum ETFs being approved in May.
- The SEC’s decision to postpone its ruling on individual requests, such as Grayscale’s, has prompted analysts to reconsider their predictions.
- By February, analysts at Bernstein discussed a 50% chance of an Ethereum investment vehicle entering the market in May.
- CNBC’s Jim Cramer remains optimistic about the approval, believing it is likely to come soon.
Companies Pursuing Spot Ethereum ETFs
A number of investment asset management firms have shown interest in launching spot Ethereum ETFs and have submitted applications to the SEC. These companies include:
- BlackRock: The company submitted its Ethereum ETF application in November 2023, preceding the approval of its spot Bitcoin ETF.
- Grayscale: Led by Michael Sonnenshein, Grayscale has also applied for an Ethereum ETF and submitted its application about a month before BlackRock.
- Other interested asset managers: Franklin Templeton, VanEck, and ARK 21Shares are among the other companies pursuing spot Ethereum ETFs.
The goal of these companies is to provide investors with access to Ethereum through regulated investment vehicles, which could potentially attract more institutional and retail investors to the cryptocurrency market.
Hot Take: Uncertainty Surrounds Ethereum ETF Approval
While there is ongoing speculation and optimism surrounding the approval of a spot Ethereum ETF, there are significant uncertainties that may impact the SEC’s decision-making process.
Key points:
- Jake Chervinsky, Chief Legal Officer of Variant, doubts the likelihood of an Ethereum ETF approval this year.
- The SEC is under political pressure and operating in a volatile market, which could influence its decision.
- An Ethereum ETF could further fuel the current market frenzy driven by emotional influences.
- BlackRock’s success in obtaining ETF approvals may be attributed to its ability to exert pressure and maintain a collaborative relationship with the SEC.
While the approval of an Ethereum ETF seems inevitable in the long run, it remains uncertain when it will happen. Investors and industry participants will continue to monitor regulatory developments and the SEC’s stance on cryptocurrency ETFs.
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