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Spot Ethereum ETF Approval Uncertain Despite Market Expectations

As the crypto market eagerly awaits the potential approval of spot Ethereum (ETH) ETFs, analysts are expressing uncertainty about the likelihood of such approval by May.

Bloomberg’s ETF expert, Eric Balchunas, recently indicated that the probability of spot Ethereum ETF applications being accepted by May is less than 50%. This sentiment contrasts with earlier predictions, which suggested a 60% to 70% chance of approval by May. Balchunas pointed out the absence of certain indicators that preceded the approval of spot Bitcoin (BTC) ETFs in January, adding to the uncertainty surrounding Ethereum ETF approval.

Echoing similar sentiments, Fox’s Eleanor Terrett noted that the U.S. SEC has yet to engage with issuers regarding spot Ethereum ETF bids, unlike its approach to spot BTC ETF applications last year.

Jake Chervinsky, chief legal officer at Variant Fund, shared insights aligning with Balchunas and Terrett’s views. Chervinsky highlighted the possibility of the SEC introducing new grounds for denial, drawing from previously unestablished arguments during the Grayscale court case. He suggested that the SEC may revisit its stance on the correlation between spot and futures markets, potentially insisting that futures products offer sufficient exposure to crypto assets.

Chervinsky emphasized that while there is still a chance for a spot Ethereum ETF to be approved this year, the prevailing sentiment in the early to mid bull market may be overestimating the likelihood of approval, considering the political and strategic factors at play.

The uncertainty surrounding spot Ethereum ETF approval has left issuers in a state of limbo. While Gary Gensler’s commission engaged in consistent talks with spot BTC ETF applications within 90 days of the deadline, the SEC has delayed decisions on multiple spot ETH ETF bids until May. Despite reports suggesting possible meetings between the SEC and issuers for spot Ethereum ETFs, there has been no apparent feedback to issuers on filing details.

Coinbase has joined the chorus urging the SEC to approve Grayscale’s bid to convert its Ethereum Trust into an ETF, emphasizing the importance of such a move in the evolving crypto landscape.

In summary, while hopes remain high for the approval of spot Ethereum ETFs, uncertainty looms large amidst regulatory considerations and evolving market dynamics.

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