The future of Spot Ethereum Exchange-Traded Funds (ETFs) in the US is still uncertain, with a decision expected on 23rd May. Even though Bitcoin ETFs were approved in January, which led to increased activity in the crypto market, there is less clarity on what lies ahead for Ether ETFs.
According to recent reports from the Fox Business correspondent Eleanor Terrett, the SEC might be softening. Issuers, custodians, and staff have been having one-sided small meetings about potential Ether ETF filings, while the SEC sounds like it’s giving Bitcoin ETFs a free pass. Chairman Gary Gensler might think that Bitcoin ETF approval has already addressed industry demand.
I’m told that Gary Gensler believes he already placated the industry with the approval of the spot BTC ETFs, said Terrett.
The SEC is worried about the relationship between futures contracts for Ethereum and the underlying spot market. The claim has been that this argument lacks any substance, according to ETF Store President Nate Geraci. According to him, if the SEC allows investors to invest in Ether ETFs, then such a regulator must also have no issues with spot products as well.
Grayscale, a company that offers a range of financial products that enable customers to invest in digital assets, is being sued by the SEC for its bitcoin trust. The possible Grayscale victory could set an important precedent for the acceptance of Ethereum ETFs. The SEC might have to either “unwind years of implicit acceptance of Ether as a commodity” or be open to more issuer lawsuits as Geraci argues.
Ether ETF Prospects Amid SEC Dynamics
However, it is still possible for Ethereum ETF to be approved by May 23rd. Eric Balchunas, Bloomberg’s ETF analyst, admits that its Chairman Gensler faces political headwinds. Grayscale may not be as aggressive in legal strategy as it was in the Bitcoin ETF saga.
The SEC’s position will be seen as crucial in the next few weeks. There is a possibility of the commission having an active engagement with the stakeholders and its addressal of correlation and regulatory clarity concerns could make it clearer about ETFs on Ethereum. However, there can be more political pressure and internal disputes within the SEC, causing these applications to be delayed or rejected completely.
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