Challenges Mount for Approval of Ether ETF by U.S. SEC, Issuers Express Doubt

Uncertainty Looms Over Approval of Ether ETFs

As the deadline for the U.S. Securities and Exchange Commission (SEC) to review the applications for an ether exchange-traded fund (ETF) draws near, doubts arise among the issuers. The SEC has until late May to reach a decision, following the extension of the original deadline in March. Companies like BlackRock, Fidelity, and VanEck, which have already issued spot bitcoin ETFs this year, are eagerly anticipating the approval for an ether product. However, some issuers are skeptical about the SEC giving the green light to the ether applications.

Facing Rejection

VanEck CEO Jan Van Eck expressed his lack of confidence in the approval process, stating, "We were the first to file as well for Ethereum in the U.S., and we and [Ark Invest CEO] Cathy Wood, are kind of the first in line for May, I guess, to probably be rejected." This sentiment reflects a prevailing skepticism about the likelihood of the SEC approving the ether ETF applications. The regulatory process involves receiving comments on the application, which has been a protracted affair, especially in comparison to the approval process for Bitcoin ETFs.

Challenges Ahead

SEC Chair Gary Gensler's emphasis on the majority of crypto assets being viewed as investment contracts subject to federal securities laws has cast a shadow on the prospects of an ether ETF. The complexity arises from the SEC's stance, making it unclear whether such an investment product will receive approval. Jean-Marie Mognetti, CEO of CoinShares, echoed this sentiment, stating, "We are observing the Ethereum decision very, very closely." He drew parallels to CoinShares' entry into the race for a bitcoin ETF shortly before its approval and expressed pessimism about the possibility of gaining approval for an ether ETF in the near future.

Protocol Specifics

An additional layer of complication stems from the specific protocols underlying different cryptocurrencies. Mognetti highlighted the challenges, expressing doubt about any approval being granted in the near future, suggesting the difficulty in gaining SEC approval for proof of stake, a protocol unique to blockchain technology. This contrasts with the protocol underpinning Bitcoin, known as proof of work, which has not faced scrutiny from a securities law standpoint by the SEC.