SEC cold-shoulders Ethereum ETF applicants in meetings, dashing hopes of May approval

The US SEC is expected to reject multiple applications for exchange-traded funds (ETFs) based on the world’s second-largest cryptocurrency, Ethereum, Reuters report This was revealed on April 25th, citing industry sources.

The decision is expected in May and follows recent discouraging interactions between ETF issuers and the SEC.

Companies such as VanEck and ARK Investment Management, among others, have filed applications with the SEC for ETFs that directly track the spot price of Ether.

The agency’s decisions on these applications are expected to be made by May 23 and May 24, respectively, with VanEck and ARK being the first to be decided.

cold shoulder

Participants in recent meetings with the SEC said the discussions were one-sided and agency staff declined to comment substantively on the proposal. This is in stark contrast to the detailed discussions that took place before the SEC approved a spot Bitcoin ETF earlier this year.

The SEC, under the leadership of Gary Gensler, a prominent crypto skeptic, has historically taken a cautious stance, citing concerns about market manipulation. However, the approval of a Spot Bitcoin ETF earlier this year, following Grayscale Investments Inc.’s court victory against the SEC, raised hopes among crypto advocates.

ETF issuers argue that approval for both spot Bitcoin ETFs and Ether futures-based ETFs should logically be extended to Spot Ether products as well.

Despite the SEC’s efforts to address regulatory concerns, many expect a rejection due to the SEC’s noncommittal stance in recent meetings, the report said.

Regulatory uncertainty

Todd Rosenbluth, head of ETF analysis at VettaFi, told the newswire that approval could be delayed until late 2024 or later due to continued regulatory uncertainty. . Meanwhile, issuers like VanEck remain engaged and plan further disclosures to maintain dialogue with the SEC.

Potential rejections are already impacting the cryptocurrency market. Hong Huang, president of cryptocurrency exchange OKX, said that although Ethereum’s price has risen this year, it has lagged behind Bitcoin’s rise, and this difference is influenced by market expectations about the SEC’s decision. He pointed out that it was highly possible.

The SEC’s reluctance may stem from a perceived need for more comprehensive market data on Ether. Recent speculation suggests that regulators have opened an investigation into the Ethereum Foundation through Swiss authorities.

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