Uncertainty Surrounding Approval of Spot Ethereum ETFs

Uncertainty Surrounding Approval of Spot Ethereum ETFs

The approval of spot Ethereum exchange-traded funds (ETFs) in the United States has been met with significant uncertainty. FOX Business reporter Eleanor Terrett revealed that the U.S. Securities and Exchange Commission (SEC) currently maintains a strong opposition to approving such ETFs. Terrett obtained insider information suggesting that there is “some internal resistance” at the SEC regarding the idea of approving a spot Ethereum ETF. Although Terrett did not specify the source of her information, it is unclear whether it originates from a member of the SEC or an asset manager seeking approval from them.

Furthermore, Terrett highlighted the stance of SEC Commissioner Hester Peirce, who has been known for her supportive views on cryptocurrencies. Peirce has advocated for a more streamlined decision-making process. However, in a recent interview with Coinage, she criticized the SEC’s approach of approving spot Bitcoin ETFs based on legal victories obtained by the applicants. Peirce believes that the approval process should involve “regular way consideration” instead of relying on court cases to compel action.

Terrett suggested that the SEC’s stance on spot Ethereum ETFs may become clearer in the coming months as they engage with S-1 registration statements. Typically, the SEC notifies the public of meetings with asset managers and exchanges on each ETF’s page as they occur. This engagement could provide further indications of the SEC’s position on spot Ethereum ETFs.

Despite the reported resistance within the SEC, asset managers responsible for issuing spot Ethereum ETFs remain optimistic about the eventual approval. One issuer, who submitted an application for an ETH Spot ETF, expressed confidence in the approval and a smooth launch based on the successful approval of Bitcoin spot ETFs. They believe that the SEC will be compelled to approve spot Ethereum ETFs in a similar manner.

Another unnamed issuer pointed to the SEC’s earlier approval of Ethereum futures ETFs and BlackRock’s strong track record in ETF approvals as factors supporting the likelihood of a spot Ethereum ETF launching by the end of the summer. Additionally, they mentioned the Commodity Futures Trading Commission’s comments regarding Ethereum’s classification as a commodity and Ripple’s partial legal victory against the SEC as potential elements that could prevent the SEC from labeling cryptocurrencies as securities more broadly. However, it remains uncertain whether these factors will directly impact the approval of spot Ethereum ETFs in the coming months.

Public expectations regarding the approval of spot Ethereum ETFs vary considerably. Bloomberg ETF analyst Eric Balchunas estimates a 70% chance of approval in May, suggesting a relatively optimistic outlook. On the other hand, JP Morgan executive Nikolaos Panigirtzoglou predicts a 50% chance of approval, indicating a greater level of uncertainty. Polymarket odds indicate a 53% chance of approval, aligning with a cautious sentiment among market participants.

The approval of spot Ethereum ETFs in the United States faces significant challenges and uncertainty. The SEC’s reported resistance, Commissioner Peirce’s contrasting stance, ongoing engagement with asset managers, and varying public expectations contribute to the complexity of the situation. While asset managers remain hopeful for approval based on previous successes and favorable market conditions, only time will reveal the SEC’s ultimate decision regarding spot Ethereum ETFs.

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