Spot Ether ETFs Face Anticipated SEC Denial Next Month

A new report suggests that the United States Securities and Exchange Commission (SEC) is likely to turn down applications for spot Ether (ETH) exchange-traded funds (ETF) in May.

According to Reuters, U.S. issuers and other entities anticipate the SEC’s rejection of spot Ether ETF applications next month, based on discussions with the regulator in recent weeks.

Four individuals involved in these discussions, preferring anonymity due to their private nature, disclosed that recent meetings between issuers and the SEC have been largely one-sided. They noted that agency staff have not engaged in detailed discussions regarding the proposed products.

The sources attribute the failed Ether ETF talks to extensive discussions between issuers and the agency in Jan, weeks before the approval of spot Bitcoin ETFs.

Before the groundbreaking approval, the SEC rejected spot BTC ETF filings for over ten years. It only shifted its position after Grayscale Investments secured a court victory against the securities regulator in Aug 2023.

Most experts think the SEC will probably postpone approving Ether ETFs. VettaFi ETF data analyst Todd Rosenbluth said it’s more likely approval won’t happen until later in 2024 or even later. He added that the rules and regulations are still unclear.

Eric Balchunas, an analyst at Bloomberg ETF, previously guessed the SEC had a 35% chance of approving a spot Ether ETF in May. He also said he’d heard from reliable sources that the SEC might be deliberately ignoring potential fund issuers.

Ether ETFs: SEC Talks Fail

Balchunas also pointed out that SEC Chair Gary Gensler’s position on Ether could influence decision-making. Gensler has not clarified whether Ether should be classified as a security.

While the U.S. seems poised for another delay, some international jurisdictions are progressing with plans to launch ETF trading.

On April 24, the Securities and Futures Commission (SFC) of Hong Kong officially approved the first set of spot Bitcoin (BTC) and Ether ETFs, including three BTC and three ETH ETFs by China Asset Management (ChinaAMC), Harvest Global Investments, and Bosera.

Once approved, Hong Kong’s crypto ETFs will likely begin trading on April 30.

The author’s views are for reference only and shall not constitute any investment advice. Please ensure you fully understand and assess the products and associated risks before purchasing.