As May 23rd gets closer, the hope that the SEC will approve an Ethereum spot ETF is fading away. Forbes reporter Eleanor Terrett brought to light the diminishing chances, uncovering a story that looks worrisome for those excitedly waiting for the green light.
Terrett’s information, from talks with insiders who know the SEC’s inner workings, paints a one-sided picture. While issuers and custodians have been actively pushing the SEC staff to get the process started, their efforts have been met with silence – very different from the involvement seen during the Bitcoin spot ETF applications.
The reason for this hesitation, according to Terrett, is SEC Chair Gary Gensler’s belief that approving Bitcoin spot ETFs was enough of a concession to the crypto industry. Plus, the anti-crypto voices led by influential politicians like Senator Elizabeth Warren have grown louder, strongly opposing any further accommodation of Ethereum within the regulatory world.
One unnamed source gave a gloomy view:
Staff has been very hard to gauge on this and we’re not sure if anyone really knows what’s going on in their heads. But they’re going to have to start work soon if it’s going to have a shot.
Ethereum ETF Approval in Limbo
Terrett’s revelations echo Bloomberg analyst Eric Balchunas, who recently doubted the prospects of a spot in Ethereum ETF. Balchunas pointed to the lack of staff comments to issuers as a concerning sign, diverging from the path taken during the Bitcoin ETF approval process. The absence of an impending court loss and weaker ties between futures and spot markets further dampened his optimism.
The market seems to have noticed these ominous signals. Well-known trader DeFi^2 revealed prediction markets now give a mere 24% chance of an Ethereum spot ETF approval at the May deadline. This stark reality contrasts the bullish expectations that have driven Ethereum’s price surge recently.
The crypto world hangs on the edge as time moves swiftly. Bitcoin is increasingly becoming an attractive, safe haven for those who bet against Ethereum spot ETF approval. If rejected, this biggest digital currency can become only one tradfi-approved crypto asset drawing in the capital, potentially attracting capital initially meant for the Ethereum ETF. The resilience of both investors and regulators will be tested in the coming weeks for sure.