The Uncertainty Surrounding the Approval of Spot Ethereum ETFs

Following the approval of spot Bitcoin ETFs in mid-January, the crypto markets experienced a significant surge of 60%, resulting in the addition of a trillion dollars to the total capitalization. While Bitcoin managed to chart a new all-time high, Ethereum, on the other hand, struggled to surpass the $4,000 level decisively.

On March 11, Fox Business correspondent Eleanor Terrett reported that optimism regarding the approval of spot Ethereum ETFs by the U.S. Securities and Exchange Commission by May 23rd is diminishing. Conversations with individuals familiar with the matter revealed that recent meetings have been largely one-sided, with issuers and custodians attempting to persuade SEC staff to expedite the process.

Despite efforts from industry players to engage the SEC staff actively, the response has not been as encouraging as seen with Bitcoin spot ETF applications. Gary Gensler’s stance on the matter further complicates the situation, as he is believed to have already appeased the industry with the approval of Bitcoin ETFs. Anti-crypto politicians like Elizabeth Warren have also expressed their discontent with the approval of Bitcoin ETFs and are now rallying against a similar approval for Ethereum.

ETF Store President Nate Geraci highlighted the SEC’s argument that Ethereum futures are not closely correlated with spot markets. Despite this, he questioned how the SEC could justify rejecting spot Ethereum ETFs based on the lack of correlation, suggesting that it would reflect poorly on the regulatory body. Geraci also pointed out the significance of the Grayscale court victory as a compelling reason for approval, while highlighting the potential consequences for the SEC if they choose to deny the approval.

Bloomberg ETF analyst Eric Balchunas shared his opinion on the matter, indicating that Gary Gensler’s position on Bitcoin ETFs might influence the decision-making process for Ethereum ETFs. The uncertainty surrounding the approval of spot Ethereum ETFs has led to speculations within the industry, with experts suggesting that the SEC’s stance on investor ownership of ETH futures ETFs should align with the approval of spot Ethereum ETFs.

The approval of spot Ethereum ETFs remains uncertain, with various challenges and perspectives influencing the decision-making process at the U.S. Securities and Exchange Commission. The industry awaits further developments and clarity on the regulatory stance towards Ethereum ETFs.