Will SEC be sued if Ethereum ETFs are rejected? Analysts weigh in

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    Analysts are undecided on whether there will be litigation if there is an ETH ETF rejection in May. 
    But the odds of approval in May remain very low across the board. 

With the deadline approaching, it appears uncertain that Ethereum [ETH] ETFs will be approved by May. Some are already speculating about the potential consequences if these ETF applications were denied in May.

“Might Grayscale initiate a lawsuit against the SEC similar to the one it filed in 2022 when the regulatory body declined its proposal to transform GBTC into a Bitcoin [BTC] spot ETF?”

According to Eric Balchanus, an analyst at Bloomberg ETF, Grayscale is unlikely to initiate legal action if Ethereum ETFs are denied approval in May. He explained that the size of the Ethereum ETF futures market is much smaller than that of Bitcoin‘s, making it less probable for Grayscale to take such a step.

Many believe that Grayscale or someone else may file a lawsuit against the SEC following their rejection of Ether spot ETFs. However, I’d like to raise some doubts about this assumption. After all, Ether futures ETFs currently hold just 4% of the assets compared to Bitcoin futures ETFs.

The analyst added,

“That’s a lot of time and money for something that may only get a fraction of the aum.”

JPMorgan expects litigation in case of ETH ETF May rejection

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Balchunas holds a opposing perspective to JPMorgan’s analysts. In a conversation with The Block, JPMorgan expressed a positive outlook regarding the potential acceptance of ETH spot ETFs.

JPMorgan lead analyst Nikolaos Panigirtzoglou noted that,

If Ethereum ETF approval does not occur in May, we anticipate that a legal dispute will follow.

Despite the optimism of some, executives at companies such as VanEck and CoinShares expressed skepticism towards May’s approval.

In a recent interview with CNBC, VanEck’s CEO, Jan van Eck, made a comparison between the ongoing process of approving a Bitcoin spot ETF and their previously filed Ethereum ETF. He expressed that significant progress is being made in the case of Ethereum.

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According to CoinShares CEO Jean-Marie Mognetti, it is unlikely that an Ethereum ETF will be approved this year.

Despite Grayscale CLO Craig Salm expressing confidence in May’s approval in late March, the absence of regulatory engagement should not be seen as a definitive sign of the outcome.

Despite this, it’s uncertain if someone or one of the possible applicants will file a lawsuit once ETH spot ETF applications are denied in May.

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2024-04-11 20:07