US SEC expected to deny spot Ether ETFs next month

Based on my experience and understanding of the regulatory landscape for cryptocurrency exchange-traded funds (ETFs) in the United States, I believe that the SEC is highly unlikely to approve a spot Ether ETF in May. The recent meetings between issuers and the SEC have reportedly been one-sided, with agency staff not discussing any substantive details about the proposed products.

Based on a recent report, it’s anticipated that the SEC is likely to reject applications for spot Ethereum (ETH) ETFs when they make their decision in May.

According to Reuters’ report on the 24th of April, industry insiders, including U.S. issuers and other firms, anticipate that the SEC will decline Ether spot Exchange Traded Fund (ETF) applications in May based on information shared from recent meetings with regulatory officials.

Four individuals, requesting anonymity for confidential reasons, shared that their encounters with the SEC in recent times were predominantly monologues from the issuers, with little to no exchange regarding substantial aspects of the proposed products.

I observed that the sources put a halt to the failed negotiations about Ether Exchange-Traded Funds (ETFs) in January, replacing them with intricate conversations between the issuers and the regulatory agency. A few weeks later, they gave their approval for spot Bitcoin ETFs instead.

For more than ten years prior to the groundbreaking decision, the Securities and Exchange Commission (SEC) had denied spot Bitcoin ETF proposals. However, following Grayscale Investments’ successful lawsuit against the SEC in August 2023, the regulatory body shifted its stance on these applications.

Many analysts agree that the SEC is likely to further delay possible approval of Ether ETFs.

According to VettaFi ETF data analyst Todd Rosenbluth, it appears more reasonable for approval to be postponed until late in 2024 or even beyond, given the current uncertain regulatory environment.

According to Eric Balchunas, an analyst at Bloomberg ETF, the probability of the Securities and Exchange Commission (SEC) approving a spot Ethereum Exchange-Traded Fund (ETF) in May was approximately 35% as of March. He added that based on reliable information he had obtained, the SEC might be deliberately ignoring applications from potential ETF issuers.

I observed Balchunas pointing out that the Securities and Exchange Commission (SEC) Chair, Gary Gensler’s position regarding Ether, might influence the decision-making process. Gensler has been evasive about classifying Ether as a security, failing to provide much-needed clarity on the matter.

I’ve noticed that while the United States seems poised for more postponement, certain international entities have been making strides in initiating trades for Exchange-Traded Funds (ETFs).

On April 24, the Securities and Futures Commission (SFC) in Hong Kong gave its approval for the first set of Bitcoin (BTC) and Ethereum (ETH) exchange-traded funds (ETFs). Among the approved ETFs were three BTC and three ETH offerings from China Asset Management (ChinaAMC), Harvest Global Investments, and Bosera.

Following approval, Hong Kong’s crypto ETFs are expected to start trading on April 30.

2024-04-25 14:15

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