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The US SEC is expected to reject several applications for exchange-traded funds (ETFs) based on ethereum, the world's second-largest cryptocurrency, Reuters reported on April 25, citing industry experts.
The decision, expected in May, follows recent discouraging interactions between ETF issuers and the SEC.
Companies like VanEck and ARK Investment Management, among others, have filed applications with the SEC for ETFs that would directly track the spot price of ether.
Agency decisions on these applications, with VanEck and ARK first in line, are due on May 23 and 24, respectively.
cold shoulder
Participants in recent meetings with the SEC described the talks as one-sided, and agency staff withheld substantial comment on the proposals. This marks a stark contrast to the detailed discussions that preceded the SEC's approval of bitcoin spot ETFs earlier this year.
Under the leadership of Gary Gensler, a prominent crypto skeptic, the SEC has historically been cautious, citing concerns about market manipulation. However, the approval of bitcoin spot ETFs earlier this year, which followed a court victory by Grayscale Investments against the SEC, had raised hopes among cryptocurrency advocates.
ETF issuers have argued that the approval of both bitcoin spot ETFs and Ether futures-based ETFs should logically be extended to spot ether products.
Despite its efforts to address regulatory concerns, the SEC's evasive stance in recent meetings has led many to anticipate pushback, according to the report.
Regulatory uncertainty
Todd Rosenbluth, head of ETF research at VettaFi, told the news service that approval could be deferred until later in 2024 or beyond due to ongoing regulatory uncertainties. Meanwhile, issuers like VanEck remain committed and plan further disclosures to maintain dialogue with the SEC.
The possible rejection is already impacting the cryptocurrency market. Hong Fang, president of cryptocurrency exchange OKX, noted that while Etheruem's price has risen this year, it lags behind bitcoin's gains, a disparity likely influenced by the market's anticipation of the SEC's decision.
The SEC's hesitation may be due to a perceived need for more comprehensive market data on Ether. Recent speculation claims that the regulator has launched an investigation into the ethereum Foundation through Swiss authorities.
