May Approval Unlikely for ETH ETFs: Analysts See Big Red Lights in SEC Approach

March 20, 2024

Hopes for the SEC’s approval of Ethereum exchange-traded funds (ETF), which was expected to come in May, may have been dashed, according to an ETF analyst. On Tuesday, the U.S. financial watchdog postponed its decision on Hashdex and Ark 21Shares’ ETF proposals, setting the stage for a final verdict in late May.

The likelihood of spot Ether ETFs securing approval in May has diminished, noted Bloomberg ETF analyst James Seyffart. This surprising shift in sentiment among industry analysts on the future of U.S. Ethereum ETFs stemmed from their observation of recent developments.

Earlier this month Seyffart and his fellow Bloomberg ETF analyst Eric Balchunas saw an optimistic 35% approval odds for Ethereum ETFs, but the tide seems to be turning now. Seyffart’s expectation has pivoted toward a probable regulatory denial of Ethereum ETF applications by May 23. His outlook has been influenced by a notable lack of engagement by the SEC with potential issuers on the details of Ethereum, marking a stark contrast to the regulatory body’s approach toward Bitcoin ETFs earlier this fall.

“My cautiously optimistic attitude for ETH ETFs has changed from recent months. We now believe these will ultimately be denied May 23rd for this round. The SEC hasn’t engaged with issuers on Ethereum specifics. Exact opposite of Bitcoin  ETFs this fall,” Seyffart said in a tweet.

Seven issuers are currently in the race to launch an Ether fund, a testament to the growing interest in cryptocurrency investment products. These include industry heavyweights such as BlackRock and Fidelity, alongside collaborative efforts like Invesco with Galaxy. Other notable names throwing their hats in the ring are Grayscale, VanEck, 21Shares in partnership with Ark, and Hashdex, each aiming to pioneer offering an Ethereum-based investment vehicle.

The SEC, in its recent statement on the delay of its decision on the ETH ETF applications of Hashdex and ARK 21 Shares, explained: “The Commission finds that it is appropriate to designate a longer period within which to issue an order approving or disapproving the proposed rule change so that it has sufficient time to consider the proposed rule change and the issues raised therein.”

The SEC has set its final decision dates for Ethereum ETF applications: ARK 21Shares is up for its verdict on May 24, whereas Hashdex’s proposal will reach its moment of truth on or before May 30. 

Grayscale has recently updated its spot Ether ETF application to potentially incorporate staking, joining other forward-thinking issuers in exploring this feature. 

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