A new report suggests that the U.S. Securities and Exchange Commission (SEC) is poised to reject spot Ethereum exchange-traded funds (ETFs) in May.
According to Reuters' April 24 report, U.S. issuers and other entities anticipate the SEC's rejection of a spot Ethereum ETF application next month, following recent meetings with regulators. Citing insights from four individuals familiar with the discussions, Reuters highlighted that these meetings have been largely one-sided, with agency staff yet to engage in substantive talks regarding the proposed products.
Sources, speaking on condition of anonymity due to the private nature of the discussions, likened the current situation to unsuccessful negotiations for an Ethereum ETF, contrasting it with the detailed discussions held between the issuer and the agency in January, prior to the SEC's approval of a spot Bitcoin ETF.
Before the groundbreaking approval, the SEC had consistently rejected spot BTC ETF applications for over a decade. It was only in August 2023, following a legal victory by Grayscale Investments against securities regulators, that the landscape began to shift. Despite this, many analysts speculate that the SEC could further postpone the approval of an Ethereum ETF.
Todd Rosenbluth, an ETF data analyst at VettaFi, was cited as saying that the likelihood of approval may be pushed back until later in 2024 or even beyond, attributing this to the persistently unclear regulatory environment.
Bloomberg ETF analyst Eric Balchunas previously estimated a relatively low likelihood of SEC approval for a May spot ether ETF, suggesting it was around 35% back in March. He also indicated that the SEC might be intentionally withholding communication with potential fund issuers. Furthermore, Balchunas noted that SEC Chairman Gary Gensler's stance on ether's classification could also influence the decision, as Gensler has refrained from definitively categorizing ether as a security.
While the U.S. deliberates, other jurisdictions are making progress towards introducing ETF trading. On April 24, the Hong Kong Securities and Futures Commission (SFC) officially greenlit the first batch of spot Bitcoin and Ethereum ETFs, marking a significant development in the global ETF landscape.
