SEC Likely to Reject Ethereum Spot ETF Applications, Experts Say

bitcoin spot exchange-traded funds (ETFs) got the green light, but ethereum spot ETFs could hit the red light. According to Reuters report Posted today, sources familiar with recent conversations between ETF issuers and the SEC suggest that the agency is likely to reject ethereum spot ETFs during its final review next month.

SEC decisions on VanEck and ARK's filings are due May 23 and 24, respectively. Unlike the discussions that preceded the SEC's approval of bitcoin spot funds, recent conversations have lacked substance, and SEC staff did not engage in detailed conversations about the proposed ethereum ETFs, according to four people reportedly involved in meetings with the SEC.

Sources also noted that despite ETF issuers' arguments that approved bitcoin spot ETFs and ethereum futures-based ETFs set a precedent, the SEC's silence on specific concerns suggests a likely rejection. .

According to SEC records and sources familiar with the matter, the SEC has not had many meetings regarding the timely review of the ethereum ETF. Of the few meetings, only one has been made public. This meeting was with Coinbase, regarding Grayscale's offer to convert its ethereum Trust into an ETF. Coinbase would act as custodian of this ETF.

If the SEC were to reject ethereum ETFs, applicants anticipate the reason would likely be broader issues, such as concerns about the quality and depth of market data related to ethereum.

Matt Hougan, chief investment officer at Bitwise Asset Management, one of the one-time ethereum ETF applicants, suggests that the SEC might want more time to study the ethereum futures market before making a decision.

The SEC's approach to ethereum spot ETF filings is markedly different from the past, where there was intensive and detailed dialogue prior to the SEC's approval of bitcoin spot ETFs in January.

Historically, the brokerage had rejected spot bitcoin ETFs over concerns about market manipulation. However, they were ultimately forced to approve them following a successful court challenge by Grayscale Investments.

In their previous comments, JPMorgan analysts suggested that if the SEC denies ethereum spot filings, ETF issuers may file lawsuits against the agency, which could end up forcing the SEC to review and eventually approve the trading of these. products.

Due to the current frustrating situation, VanEck CEO Jan van Eck expressed a similar expectation of denial. In his recent interview with CNBC, he said that VanEck's application and that of ARK Invest would be rejected first.