US SEC Expected to Reject Ethereum ETF Applications: Industry Insiders
The US Securities and Exchange Commission (SEC) is expected to deliver a blow to the cryptocurrency market by rejecting several applications for exchange-traded funds (ETFs) based on Ethereum, the world’s second-largest cryptocurrency. According to Reuters, industry insiders anticipate the decision to be announced in May, following disappointing interactions between ETF issuers and the SEC.
Firms such as VanEck and ARK Investment Management have been eagerly awaiting the SEC’s decision on their applications for ETFs that would directly track the spot price of ether. The agency is set to make its rulings on these applications by May 23 and May 24, with VanEck and ARK being the first in line.
Recent meetings between ETF issuers and the SEC have been described as one-sided, with agency staff providing minimal feedback on the proposals. This stands in stark contrast to the detailed discussions that preceded the SEC’s approval of spot Bitcoin ETFs earlier this year.
Under the leadership of Gary Gensler, a known crypto skeptic, the SEC has historically approached cryptocurrency regulation with caution, citing concerns over market manipulation. Despite the approval of spot Bitcoin ETFs, hopes for a similar outcome for Ethereum-based ETFs have been dampened by the SEC’s non-committal stance.
Todd Rosenbluth, head of ETF analysis at VettaFi, believes that approval for Ethereum ETFs may be delayed until later in 2024 or beyond due to ongoing regulatory uncertainties. However, issuers like VanEck are continuing to engage with the SEC, planning further disclosures to address regulatory concerns.
The potential rejection of Ethereum-based ETFs is already impacting the cryptocurrency market, with Ethereum’s price lagging behind Bitcoin’s gains. Hong Fang, president of crypto exchange OKX, attributes this disparity to market anticipation of the SEC’s decision.
The SEC’s hesitancy may be fueled by a perceived need for more comprehensive market data on Ethereum. Speculation suggests that the regulator has initiated an inquiry into the Ethereum Foundation through Swiss authorities, adding to the regulatory uncertainty surrounding the cryptocurrency.
