Spot Ethereum ETF Approvals Are Now Weakening Due To SEC Challenges

Key Points:

• SEC’s approval for a spot Ethereum ETF dims, as one-sided talks lack staff engagement.
• The industry faces pushback, with criticism from SEC Chairman and Senator Warren.
• Grayscale and Coinbase advocate for Ethereum ETFs, with a decision expected in May.

Optimism surrounding the approval of a spot Ethereum Exchange-Traded Fund (ETF) by the Securities and Exchange Commission (SEC) is dwindling, according to Fox Business reporter Eleanor Terrett.

Optimism Fades: SEC’s Spot Ethereum ETF Approval in Doubt

Terrett reported that recent discussions with SEC officials have been predominantly one-sided, with issuers and custodians advocating for advancement but receiving minimal engagement from SEC staff, unlike the process for the spot Bitcoin ETF application.

Terrett noted that the SEC Chairman’s approval of the spot Bitcoin ETF was perceived as a concession to the industry, although it has drawn criticism from influential anti-cryptocurrency figures like Senator Warren, who fear a similar approval for spot Ethereum ETFs.

Grayscale, Coinbase Advocate for Ethereum ETFs

Crypto firms Grayscale and Coinbase recently met with SEC officials to discuss a rule change for spot Ethereum ETFs. Grayscale aims to convert its Ethereum Trust into an ETF, akin to its Bitcoin Trust conversion in January. The meeting addressed concerns over potential market manipulation if the fund gets approval.

Coinbase argued that Ethereum’s characteristics, which mitigate fraud and manipulation, warrant ETF approval, drawing parallels with Bitcoin’s approval rationale. Asset managers such as Invesco, Galaxy Digital, Fidelity, Franklin Templeton, and BlackRock are all vying for SEC approval for spot Ethereum ETFs, with final decisions anticipated in May.

Eric Balchunas, an ETF analyst at Bloomberg, downplayed the significance of a spot Ethereum ETF, labeling it as a preliminary development compared to the Bitcoin ETF approval.