Potential Rejection Looms for Ether ETFs in the US Amid Regulatory Uncertainty

In a historic move, Hong Kong has approved spot Bitcoin and Ether ETFs, but in the US, the approval of Ether ETFs may face rejection due to regulatory issues. Recent discussions between U.S. issuers and the SEC have left issuers anticipating a possible denial, according to sources familiar with the matter.

Seven issuers, including VanEck and ARK Investment Management, are seeking to sell ETFs that track the spot price of Ether, the second-largest cryptocurrency in the world. However, meetings with the SEC have not been as detailed as those that led to the approval of spot Bitcoin ETFs in January. This lack of engagement has raised concerns among issuers about the potential rejection of Ether ETFs.

Analysts have predicted possible delays in the approval of Ether ETFs, with some issuers planning to file more paperwork to keep the conversation going. The uncertainty surrounding Ether’s regulatory standing has already affected its market performance, despite a 39% increase in value this year.

VettaFi ETF data analyst Todd Rosenbluth believes that approval for a spot Ether ETF may be delayed until later in 2024 or beyond due to the uncertain regulatory landscape. Bloomberg ETF analyst Eric Balchunas has estimated a 35% chance of SEC approval for an Ether ETF in May, indicating a lack of communication between the SEC and potential fund issuers.

If the SEC ultimately rejects Ether ETFs, some applicants anticipate potential legal challenges before approval is eventually granted. The regulatory landscape remains uncertain, leaving issuers and investors awaiting further clarity from the SEC on the future of Ether ETFs in the US market.