Fund Managers Predict SEC Rejection of Ethereum ETFs Next Week

In contrast to the enthusiasm that preceded the approval of bitcoin spot ETFs, reports in recent weeks suggest that optimistic expectations regarding the approval of the ethereum product have cooled. Speaking to Bloomberg this week, Katherine Dowling, general counsel at ETF applicant Bitwise, said she anticipates rejection next week due to the lack of public activity typically seen before approval.

“Most people universally expect a disapproval order,” Dowling noted. “You're not seeing the types of public activities that you would see if there was an approval.”

In an interview with CNBC, VanEck CEO Jan van Eck also predicted a likely denial. Next week, the SEC's decision will confirm the fate of VanEck and Ark Invest's filings.

“We were the first to apply for ethereum in the US, and myself and Cathy Wood are the first in line for May, I guess, to be rejected,” he said. bitcoin-etf-issuers-sec-wont-approve-ether-eth-exchange-traded-fund-.html” target=”_blank” rel=”noopener nofollow noreferrer”>fixed.

Unlike the frequent reviews conducted to detect bitcoin ETF applications, there has been minimal exchanges between fund companies and the SEC regarding Ether ETFs. People who participated in conversations with the brokerage reported that they expected a negative result.

In the last month leading up to the bitcoin ETF decision, the market was abuzz with activity. Fund managers engaged in fierce competition for fees, while industry experts placed bullish bets.

Bloomberg ETF analysts James Seyffart and Eric Balchunas have put the chances of approval of ethereum spot ETFs at just 25%. Seyffart recently expressed skepticism about a positive outcome, saying a nod “won’t happen.”

Why the SEC Might Decide to Reject ethereum Spot ETFs?

SEC Chairman Gary Gensler has not spoken about ethereum ETF filings. However, he has bitcoin-011023″ target=”_blank” rel=”noopener nofollow noreferrer”>clarified that the approval of bitcoin spot ETFs does not set a precedent for other cryptocurrency ETFs. Concerns over the classification of most cryptocurrencies as securities remain a major obstacle to compliance.

According to Scott Johnsson, general partner at Van Buren Capital, the SEC must provide a clear and detailed explanation if it rejects one-time ethereum ETF filings. A possible reason for the rejection could be ethereum's ranking.

<blockquote class="twitter-tweet” data-width=”500″ data-dnt=”true” wp_automatic_readability=”8.528384279476″>

The obvious purpose is to potentially deny it on the basis that these spot presentations are incorrectly presented as commodity-based trust shares and do not qualify if they hold a security.

—Scott Johnsson (@SGJohnsson) twitter.com/SGJohnsson/status/1790219763211198510?ref_src=twsrc%5Etfw” target=”_blank” rel=”nofollow noopener noreferrer”>May 14, 2024

The SEC has not definitively classified Ether and its decision could depend on whether it considers Ether a security. If the SEC considers Ether a security, then current regulations would not allow spot ETFs.

The SEC's alleged investigations into the ethereum Foundation and the implications of ethereum's staking feature suggest a possible regulatory direction.

SEC May Not Approve All ethereum ETF Spot Applications at Once: Coinbase

Despite the uncertainty, Coinbase analyst David Han sees a 30% to 40% chance of approval by the end of the month.

He believes that the correlation between CME futures and spot exchange rates, which was instrumental in bitcoin ETF approvals, could similarly benefit ethereum ETFs.

However, like Johnsson, Han noted that the SEC could focus on ethereum's PoS mechanism as a reason for denial, as regulations on staking are unclear. He suggested that ethereum spot ETFs that allow staking are unlikely to be approved.

ARK Invest and 21Shares recently amended their S-1 form for the proposed ethereum spot exchange-traded fund (ETF) by removing the staking component. The move is seen as an effort to align the filing with the SEC's preferences.