TL;DR
- The SEC faces a crucial dilemma regarding the approval of Ethereum ETFs in May, with mostly negative opinions among crypto market experts.
- Nate Geraci from ETF Store believes that the lack of dialogue between issuers and the SEC will be an obstacle to the approval of ETH ETFs.
- Eric Balchunas from Bloomberg suggests that the SEC’s silence could indicate a possible rejection. Additionally, Grayscale and other companies could resort to legal action if the applications are denied.
The U.S. Securities and Exchange Commission (SEC) is facing a crucial dilemma regarding the crypto industry; the decision on Ethereum Exchange Traded Funds (ETFs), the second largest cryptocurrency in the market. Uncertainty surrounds whether the SEC will give the green light to these financial products in May. However, expectations are mostly negative.
Nate Geraci, President of ETF Store, has expressed reservations about the likelihood of the SEC approving Ethereum ETFs in the short term. According to Geraci, the lack of dialogue between ETF issuers and the SEC could work against approval. Unlike the constant and arduous debates that preceded the approval of Bitcoin ETFs, discussions about ETH ETFs have been mostly one-sided, suggesting a latent lack of interest or commitment from issuers and regulators.
Eerily quiet on spot eth ETFs…
Consensus is SEC will disapprove in May. Reason = lack of engagement w/ issuers.
Logic says that’s correct, but also wonder if SEC learned lesson from clown show w/ spot btc ETFs.
Either way, options are either A) approve or B) face lawsuit IMO.
— Nate Geraci (@NateGeraci) April 21, 2024
Other high-caliber analysts, such as Eric Balchunas, an ETF specialist at Bloomberg, believe that the SEC’s silence is likely a sign of rejection. For Balchunas, the complete absence of feedback from the regulator reduces the chances of approval in the short term. On the other hand, there has been speculation that issuing companies like Grayscale or others may file legal actions if the SEC rejects the applications, following the precedent set by Grayscale’s recent legal victory with its Bitcoin ETF.
SEC Shows No Signs in Favor of Ethereum
The valuation of Ethereum ETFs has also been called into question. Mainly, their utility and value are compared to futures-based cryptocurrency ETFs. However, Ethereum’s market capitalization, surpassing $385 billion, indicates its power in the current financial ecosystem. Beyond any doubt, its advocates argue that the innovations and developments surrounding ETH more than justify its inclusion in traditional financial markets.
Despite the negative forecasts, the future of ETH remains uncertain, and investors and analysts are watching the SEC’s decisions and actions closely. Meanwhile, the crypto industry continues to strive to establish a clear regulatory framework that addresses the challenges and opportunities presented by cryptocurrencies like Ethereum.
