US SEC Set to Deny Spot Ethereum ETF Applications

The US Securities and Exchange Commission (SEC) is anticipated to deny the approval of a spot Ethereum exchange-traded fund (ETF), according to informed sources. The SEC's stance on approving spot Ether ETFs has been uncertain, with the agency considering Ethereum (ETH) as a security and delaying decisions on multiple issuer applications.

U.S. Securities and Exchange Commission Poised to Deny Spot Ethereum ETF Applications

Washington, D.C. - According to sources with knowledge of the situation, the U.S. Securities and Exchange Commission (SEC) is poised to reject highly anticipated applications for spot Ethereum exchange-traded funds (ETFs). This decision follows a series of disappointing meetings between the SEC and potential issuers in recent weeks.

SEC's Ambivalence Towards Ethereum Classification

The SEC's position on spot Ether ETFs has remained uncertain, with the agency contemplating the classification of Ethereum (ETH) as a security. This has led to repeated delays in the approval process for spot Ether ETFs submitted by multiple issuers.

Issuers Resigned to Denial

Issuers of spot Ether ETFs and other industry stakeholders now anticipate denials of their applications next month. This expectation stems from the negative feedback received from SEC officials during recent meetings, as reported by Reuters on April 25.

BlackRock, Grayscale, VanEck Among Applicants

Notable issuers such as BlackRock, Grayscale, VanEck, and Ark Invest have filed applications with the SEC seeking approval and listing for ETFs that track the spot price of Ether (ETH), mirroring the structure of existing spot Bitcoin ETFs. VanEck and Ark Invest's applications are scheduled for SEC review on May 23 and May 24, respectively.

SEC Staff Unenthusiastic About Spot Ether ETFs

Sources close to the matter have disclosed that SEC staff members have expressed a lack of enthusiasm for spot Ether ETFs and their potential. Participants in the discussions described the meetings as one-sided, with the SEC dominating the proceedings.

Approval Delays or Longer Outright Rejection

ETF analysis expert Todd Rosenbluth, who closely follows the issue, anticipates further delays in the approval process, potentially lasting until late 2024 or beyond. "The regulatory landscape remains opaque," he remarked.

SEC's Stance Similar to Bitcoin ETF Rejections

The SEC's reluctance to approve spot Ether ETFs aligns with its longstanding stance on spot Bitcoin ETFs, which it rejected for over a decade under Chairman Gary Gensler's leadership. Despite Grayscale Investments' legal victory against the SEC, compelling the agency to consider spot Bitcoin ETFs, Gensler has remained disinclined to grant approval.