The cryptocurrency market is abuzz with anticipation as multiple issuers compete for a place in the Ethereum ETF landscape.

Following the successful launch of Bitcoin spot products, the search for Ether-based investment vehicles has gained momentum. However, the path forward is fraught with challenges, as the U.S. Securities and Exchange Commission continues to delay its decisions and commissioners express conflicting opinions.

SEC and Issuers Meetings: Paving the Way for Dialogue

A Reuters report revealed that the SEC is planning meetings with one-time Ethereum ETF applicants next month. These meetings are intended to facilitate discussions and address concerns about the proposed Ether-based investment vehicles.

While the SEC’s public filing does not currently indicate any scheduled meetings, sources familiar with the matter have confirmed the plans. The SEC has postponed decisions on Ether-based spot products until May at the earliest, casting a shadow of uncertainty over the industry.

VanEck’s filing is the first in line, as the SEC faces a May 23 deadline to accept or reject her offer. Other prominent issuers, including BlackRock, Franklin Templeton Grayscale and Invesco Galaxy, are anxiously awaiting the SEC’s response.

Spot Ethereum ETF Offerings: A Flurry of Interest

Last year saw a surge of interest in Ethereum spot ETFs, with issuers submitting bids shortly after filings for Bitcoin spot ETFs. The subsequent approval of Bitcoin spot ETFs in January 2023, which led to the start of trading of nearly a dozen funds, fueled optimism within the industry.

However, the path to detecting Ethereum ETFs remains arduous, as the SEC grapples with regulatory complexities and concerns surrounding Ethereum’s unique characteristics compared to Bitcoin.

SEC Stance on Cryptocurrencies: A Cautious Approach

SEC Chairman Gary Gensler’s critical stance on cryptocurrencies continues to cast a shadow over the approval process for Ethereum spot ETFs. Despite approving spot Bitcoin ETFs, Gensler emphasized their high-risk nature and cautioned against interpreting the decision as a broader endorsement of crypto assets.

Ethereum’s unclear security designation, unlike Bitcoin’s unsecured commodity status, further complicates the regulatory landscape.

Unlike the lead-up to BTC spot ETF approvals, the SEC has not engaged in open dialogue with issuers regarding ETH spot ETFs. This lack of communication creates an additional obstacle for issuers seeking clarity and guidance on regulatory requirements.

Gensler’s emphasis on a collective vote by the five commissioners underscores the importance of consensus within the SEC. However, the above decisions do not guarantee broad support for cryptocurrencies, leaving issuers uncertain about the SEC’s final stance on Ethereum spot ETFs.

Industry Stakeholder Perspective: A Call for Transparency

Prominent crypto industry stakeholders such as Coinbase have expressed support for the approval of Grayscale’s ETH ETF spot application. Coinbase has also petitioned the SEC for more transparent crypto regulations, echoing the industry’s desire for a clear and predictable regulatory framework.

Possible Delay Tactics: An Evasion Strategy

James Angel, an associate professor of finance at Georgetown University, suggests that the SEC could employ various tactics to delay the approval process rather than reject applications outright. This strategy is intended to avoid potential legal challenges that could arise from rejections.

Market Impact: An Anticipation-Driven Rally

Amid ongoing efforts to secure SEC approval for spot Ether ETFs, the price of ETH has seen a significant surge, rising over 40% in the last 30 days. Grayscale experts attribute this rally to the hype surrounding ETH spot ETFs, along with anticipation for the Dencun upgrade.

By Leonardo Perez


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