Grayscale Expects SEC Approval for Spot Ether ETFs in May, Despite Concerns

Grayscale expects SEC approval for spot Ether ETFs in May despite concerns over the regulator's engagement. Chief Legal Officer Craig Salm remains optimistic, stating the perceived lack of engagement shouldn't deter the approval process.

Will Spot Ether ETFs Gain SEC Approval in May?

Grayscale remains optimistic about the approval of spot Ether (ETH) exchange-traded funds (ETFs) in May, despite concerns raised about the U.S. Securities and Exchange Commission's (SEC) alleged "lack of engagement" with applicants.

"I don't think the perceived lack of engagement from regulators should be indicative of one outcome or another [...] I personally am not deterred by it and believe the ETFs should be approved," said Grayscale Chief Legal Officer Craig Salm in a LinkedIn post on March 25.

Have Issues Been Resolved?

Salm emphasized that many of the issues typically associated with spot Ether ETFs, such as creation and redemption procedures, asset protection, and custody, were addressed during the approval process for spot Bitcoin ETFs.

"So in many ways, the SEC already has engaged and issuers simply have less to engage on this time," he said.

Staking Concerns

However, ETF issuers seeking to incorporate staking into their spot Ether ETFs may face additional hurdles with the SEC. Ark 21Shares, Fidelity, and Franklin Templeton are among the applicants with such plans.

Lack of Engagement: A Cause for Concern?

Bloomberg ETF analysts Eric Balchunas and James Seyffart have expressed concerns over the SEC's perceived "lack of engagement" and have lowered their odds for an approved spot Ether ETF in May to 25%.

Balchunas described it as a "pessimistic 25%," suggesting that the lack of engagement may be "purposeful" rather than "procrastination."

Optimism Amidst Scrutiny

Despite these concerns, Salm maintains that the recent approval of Ether Futures ETFs and the regulation of those products as commodity futures strengthen the case for spot Ether ETFs.

Coinbase Chief Legal Officer Paul Grewal and former Commodity Futures Trading Commission Commissioner Brian Quintenz have also expressed optimism.

Waiting for a Verdict

Several major financial institutions, including BlackRock, VanEck, and Grayscale, have filed applications for spot Ether ETFs. The SEC is expected to make a decision on VanEck's application by May 23, and analysts anticipate that all applicants will learn their fate on that date.