There is a cloud of uncertainty over the possibility of the U.S. Securities and Exchange Commission (SEC) likelihood to approve spot Ethereum ETF this May. Nate Geraci, president of the ETF Store, stated that the SEC’s lack of communication with issuers is enough indication of its unwillingness to advance spot Ethereum ETFs.
Ethereum ETF: SEC Silence Raises Concerns
This silence of the regulatory body starkly contrasts the engagement seen in discussions about Bitcoin ETFs, where the “back-and-forth” dialogue was consistent and stakeholders could deduce that approval was imminent.
Financial magazine, Barron’s recently reported that conversations around spot Ethereum ETF have been “very one-sided.” This is a clear indication that the SEC is unwilling to offer any feedback on the asset approval. Meanwhile, in Hong Kong, spot Ethereum ETF got approval by the Securities and Futures Commission (SFC).
Eerily quiet on spot eth ETFs…
Consensus is SEC will disapprove in May. Reason = lack of engagement w/ issuers.
Logic says that’s correct, but also wonder if SEC learned lesson from clown show w/ spot btc ETFs.
Either way, options are either A) approve or B) face lawsuit IMO.
— Nate Geraci (@NateGeraci) April 21, 2024
Summarizing the SEC’s current approach, Eric Balchunas, Bloomberg’s senior ETF analyst, described it with a pointed remark: “silence is violence.” The continued silence of the SEC is frustrating industry stakeholders, who are looking for more clarity and responsiveness from the regulatory body.
Will SEC’s Stance Trigger Legal Battle?
Analysts and stakeholders such as Jan van Eck, the CEO of investment firm VanEck, are speculating that the SEC’s reluctance to offer feedback suggests that approval for spot Ethereum ETFs remains elusive for the foreseeable future. According to Balchunas, the stance of the SEC could trigger another lawsuit.
The regulator has faced litigation in the past over its rejection of ETF applications, notably when Grayscale secured a legal victory against the SEC. In August, the U.S. District of Columbia Court of Appeals ruled that the SEC was incorrect in denying Grayscale’s Bitcoin ETF application, setting a precedent for future legal challenges.
Ethereum’s Attraction
Given the success of Bitcoin ETFs and Ethereum’s significant market cap of $379 billion, Geraci suggests that the SEC could be sued if it continues to resist approving spot Ethereum ETFs. Grayscale and other major issuers with substantial resources may view litigation as a strategic investment to position themselves as “pro-crypto” and advocates for innovation.
Despite skepticism about the value of spot Ethereum ETF, especially considering the lukewarm response to futures-based ETFs for Ethereum, many in the industry view spot ETFs as a crucial step toward mainstream acceptance and broader investor participation in the cryptocurrency market.
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