Red Light for Spot Ethereum ETFs? SEC Hints at Rejection

In a historic move, Hong Kong has given the nod to spot Bitcoin and Ether ETFs. However, across the Pacific, regulatory hurdles cast a shadow over hopes for similar approval in the U.S. Recent talks between U.S. issuers and the SEC regarding potential Ether-linked exchange-traded funds (ETFs) have left issuers on edge, with the specter of rejection looming large, according to insider sources.

As per Reuters, despite the enthusiasm of seven issuers, including industry giants like VanEck and ARK Investment Management, discussions with the SEC have not been as robust as seen in prior deliberations over Bitcoin ETFs. While the SEC meticulously scrutinized and approved spot Bitcoin ETFs earlier, talks on Ether ETFs have been marked by one-sided conversations, lacking the depth of previous engagements.

Uncertainty Looms – Rejection or Delay?

Despite arguments drawing parallels to approved Bitcoin ETFs and their Ether futures-based counterparts, the SEC’s silence on specific concerns has fueled apprehension among issuers. This shift in the SEC’s stance spells troubling times for Ether ETF hopefuls, damping the optimism ignited by the approval of spot Bitcoin ETFs.

Analysts foresee possible delays in Ether ETF approvals, with market sentiments already reflecting skepticism. Though Ether has witnessed a commendable 39% surge this year, it trails behind Bitcoin’s impressive 51% rise, underscoring uncertainties surrounding Ether’s regulatory fate and its journey to widespread adoption.

Search for Regulatory Clarity Continues

According to VettaFi ETF data analyst Todd Rosenbluth, the path to approving a spot Ether ETF appears fraught with delays, possibly stretching into 2024 and beyond. Bloomberg ETF analyst Eric Balchunas echoes this sentiment, estimating the likelihood of SEC approval at a modest 35% in May, hinting at the SEC’s reluctance to engage with potential fund issuers.

In contrast to Bitcoin ETF deliberations, discussions on Ether products with the SEC have been scant, mainly revolving around data observation. This cautious approach suggests approval may hinge on forthcoming market developments, leaving issuers contemplating potential legal recourse in the event of rejection. Nevertheless, regulatory ambiguity persists, leaving issuers and investors alike yearning for clarity from the SEC.

Stay tuned to Coinpedia for updates on SEC’s next move.