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Grayscale CLO Foresees SEC Approval for Spot Ether ETFs by May

Craig Salm, the Chief Legal Officer (CLO) at Grayscale, anticipates that the Securities and Exchange Commission (SEC) will approve spot Ether (ETH) exchange-traded funds (ETFs) by May 2024.

Salm’s optimism is rooted in the SEC’s prior engagements with Grayscale before approving Bitcoin ETFs. These discussions covered crucial operational aspects like creation/redemption procedures, cash versus in-kind contributions, authorized participants (APs), liquidity providers (LPs), and custody issues.

Drawing parallels between Bitcoin and Ethereum ETFs, Salm argues that many of the resolved issues for Bitcoin ETFs are directly applicable to Ethereum ETFs due to the similar underlying assets.

“In many ways, the SEC already has engaged and issuers simply have less to engage on this time,” Salm stated.

Salm also referenced the recent approval of Ether Futures ETFs and their classification as commodity futures, which he sees as supporting a favorable regulatory outcome for spot Ether ETFs.

Additionally, Salm pointed out the high correlation between futures and spot products, strengthening the case for approval of the latter.

These sentiments align with those expressed by other industry figures, such as Paul Grewal, Coinbase’s Chief Legal Officer, who argued that there was “no good reason” for the SEC to deny ETH ETP applications.

However, Bloomberg ETF analysts Eric Balchunas and James Seyffart expressed concerns over the SEC’s “lack of engagement,” leading them to lower their expectations for an approved spot Ether ETF in May to a pessimistic 25%. Balchunas views this stance as intentional rather than mere “procrastination.”

Currently, the SEC has received filings from various entities, including BlackRock, VanEck, ARK 21Shares, Fidelity, Invesco Galaxy, Grayscale, Franklin Templeton, and Hashdex, with VanEck’s application deadline set for May 23.

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