Spot Ethereum ETF: Here’s Why Approval Chances Plummet to 25%
The broader crypto ecosystem is eagerly awaiting the decision of the United States Securities and Exchange Commission (SEC) regarding the approval of spot Ethereum Exchange Traded Fund (ETF) products. However, the chances of approval have decreased significantly, with odds now at a mere 25%, as suggested by Bloomberg ETF Analyst Eric Balchunas.
Lack of communication between applicants and SEC
Balchunas has noted that there has been a lack of communication between the SEC and prospective ETF applicants, which is raising concerns. The absence of engagement and intentional delay in the process is not a positive sign for the approval chances.
He further revealed that there is no positive information available, implying that the current situation is not favorable. Although he personally hopes for approval, the outlook is pessimistic at the moment.
Over the past few months, the optimism for an Ethereum ETF has been diminishing, along with the anticipated approval odds, according to market analysts. In the case of the Bitcoin ETF approval process in January, the SEC had extensive communication with applicants, providing specific instructions on necessary amendments to their filings.
By this stage in the Bitcoin ETF approval process, the regulator had also met with the exchange platforms where the ETFs were expected to trade. The lack of such engagements with potential Ethereum ETF issuers indicates very low likelihood of approval.
Regarding the approval of an Ethereum ETF, we are maintaining the odds at 25%, although it is a very pessimistic 25%. The absence of communication appears to be intentional rather than procrastination. There are no positive indicators or information anywhere. Personally, I hope they approve it, but the chances are not looking good. https://t.co/nuBdCDE18L
— Eric Balchunas (@EricBalchunas) March 25, 2024
Ethereum’s security concerns
One major obstacle in the approval of a spot Ethereum ETF is the SEC’s possible concerns about its classification as a security.
Recent reports have brought attention to an ongoing investigation carried out by an unnamed state authority into the Ethereum Foundation. Additionally, it has been revealed that the SEC has issued subpoenas to businesses associated with Ethereum to gain insight into their connection with the cryptocurrency. Speculations suggest that the regulator aims to establish a stronger basis for labeling Ethereum as a security.
Furthermore, Charter on X asserts that many are dissatisfied with the SEC’s approval of the Bitcoin ETF, and the delay in approval for an Ethereum ETF might be the regulator’s attempt to rectify what is perceived as a mistake.