U.S. financial firms anticipate the Securities and Exchange Commission (SEC) will reject their proposals to introduce exchange-traded funds (ETFs) tied to the price of Ether. This follows recent meetings with the SEC described as “one-sided” and lacking in detail.
Eight issuers, including VanEck and ARK Investment Management, have filed applications with the SEC to list ETFs that would directly track the spot price of Ether. The SEC faces deadlines of May 23rd and May 24th, respectively, to decide on the applications from VanEck and ARK, the first in line.
According to insights from individuals familiar with recent discussions, SEC’s approach before approving spot Bitcoin ETFs in January 2024 were “intensive and detailed,” whereas recent Ether ETF meetings lacked substantive back-and-forth.
The lack of engagement from the SEC, led by crypto skeptic Gary Gensler, suggests a potential rejection of the Ether ETF proposals. The SEC has historically expressed concerns about market manipulation in the cryptocurrency space.
These meetings have left issuers with little optimism about the approval of their applications.
Bitcoin ETFs have been approved, although, by August 2023, the mood is still cautious for Ether ETFs because of the ruling obtained in court by Grayscale Investments against the SE Market players believe that the Bitcoin spot ETFs approved earlier and the Ether futures-based ETFs should open the way for Ether spot ETFs.
However, during the meetings, SEC staff provided no substantial feedback or queries, hinting at a likely denial of the applications. This anticipated decision could dampen hopes within the cryptocurrency sector that Bitcoin’s regulatory progress would extend to other digital currencies.
Todd Rosenbluth, head of ETF analysis at VettaFi, suggests that any approval might be postponed in 2024 or beyond, reflecting ongoing uncertainties in regulatory attitudes towards emerging crypto products.
Despite the anticipated rejection, some issuers plan to submit additional information to the SEC, with the hopes of gaining approval. Sec remains silent and refuses to comment on individual filings.
Industry experts believe a rejection could trigger lawsuits similar to Grayscale Investments’ successful legal challenge regarding a Bitcoin ETF conversion. While a rejection seems likely, some believe it’s only a matter of time before Ether ETFs become a reality.
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