In the last 24 hours, ethereum (eth), the second largest cryptocurrency by market capitalization, has seen a significant 5%. price drop. This drop comes amid growing speculation that the long-awaited ethereum ETFs will likely be rejected by the US Securities and Exchange Commission (SEC) at the upcoming May deadline.
US bitcoin ETF Issuers Brace for Expected SEC Negative
According According to a recent Reuters report, several US bitcoin ETF issuers and companies anticipate the SEC's denial of their applications to launch ETFs linked to the price of eth.
These expectations have been fueled by “disappointing meetings” between applicants and the regulatory agency in recent weeks, four people familiar with the matter reveal.
Prominent investment firms such as VanEck, ARK Investment Management and seven other issuers have filed filings with the SEC to list ETFs that would track the spot price of ethereum.
As the first in line, VanEck and ARK's applications are subject to SEC decisions by May 23 and 24, respectively.
The sources involved in the meetings between bitcoin ETF Issuers and the SEC have reported that discussions have been primarily “one-sided,” and that agency staff have not gone into substantial detail about the proposed products.
This is in stark contrast to the intense and detailed discussions between issuers and the agency before the SEC's historic approval of bitcoin spot ETFs in January.
Issuers argued during the meetings that the SEC's approval of bitcoin spot ETFs and ethereum futures-based ETFs in October set a precedent for spot. eth products. They also made efforts to address potential regulatory concerns.
Despite their arguments, the report notes that SEC staff failed to clarify specific concerns or engage in meaningful dialogue, further indicating a potential denial of the requests.
Setback for the crypto industry
If these expectations materialize, it would be a setback for the cryptocurrency industry, which had hoped that the approval of spot bitcoin ETFs would pave the way for similar products and contribute to the mainstream. adoption of cryptocurrencies.
According to Todd Rosenbluth, head of ETF analysis at data firm VettaFi, the likely delay in approval or rejection until late 2024 or beyond has left the regulatory landscape uncertain.
While some issuers have expressed their intention to file additional disclosure documentation to continue the conversation with the SEC, general sentiment indicates a growing belief that requests will be refused.
VanEck CEO Jan van Eck has already stated that the company's application will likely be rejected, while ARK Investment Management has not yet commented.
Rejected ethereum ETFs Could Spark Potential Court Battles
Several applicants expect the SEC to cite broader issues, such as the nature and depth of statistical data on the underlying eth market, as reasons for its decision in the event of an ETF rejection.
Matt Hougan, chief investment officer at Bitwise Asset Management, which has applied for a spot on the ethereum ETF, believes the SEC may need more time to observe ethereum Futures and collect additional data.
Industry insiders further speculate that rejecting ethereum ETFs could lead to legal action, with one source suggesting that the courts could get involved before ethereum ETFs finally become a reality.
The early rejection has already weighed on ethereum's price, with Hong Fang, president of cryptocurrency exchange OKX, stating that the cryptocurrency is experiencing downward pressure as market participants factor in the likelihood of a negative outcome. .
Currently, eth is trading at $3,100, further highlighting the cryptocurrency's persistent bearish trend on broader time frames. Over the last fourteen and thirty days, the token has seen significant drops of 12% and 14%, respectively.
Featured image from Shutterstock, chart from TradingView.com
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