Media: SEC leaning toward not approving spot ETH ETFs in May

What’s new? The US Securities and Exchange Commission (SEC) is likely to reject applications to launch spot exchange-traded funds (ETFs) based on Ethereum, Reuters reports, citing industry experts and representatives of investment companies awaiting the regulator’s approval. The next key dates are May 23 and 24, when officials are expected to rule on applications from VanEck and ARK Investments.

Material by Reuters

What else is known? Applications to launch spot ETH funds were submitted by several companies, which in January received approval to launch similar bitcoin-based products. In addition to VanEck and ARK, they include BlackRock, Fidelity, Bitwise, Franklin Templeton, and Grayscale.

Reuters’ interlocutors tell us that in recent meetings with potential ETH ETF issuers, SEC officials have shown no interest in discussing the substantive details of the new products. This is in stark contrast to the behavior of officials during the bitcoin fund approval period, when they actively gave companies feedback and recommended certain changes to applications to increase the likelihood of approval.

Earlier, VanEck CEO Jan van Eck had already suggested that his company’s bid would be rejected in May. Bloomberg analyst James Seyffart shared a similar prediction. He justified his assumption by the lack of initiative of officials in communicating with issuers.

In turn, Grayscale General Counsel Craig Salm stated that officials do not need additional consultations, as many issues related to the launch of crypto funds have already been resolved during the period of approval of BTC ETF.

The SEC, led by crypto skeptic Gary Gensler, rejected spot BTC ETFs for more than a decade over concerns of market manipulation, and was only forced to approve them after Grayscale won a related lawsuit. Trading in shares of spot BTC ETFs began in the United States on January 11 this year.

According to Reuters in a new piece, issuers argued in meetings with officials that the spot BTC ETFs and futures ETH ETFs already approved by the commission set a precedent for spot ETH ETFs. They also sought to address potential regulatory concerns, but SEC staff present at the meetings did not outline specific potential concerns or ask questions at all, suggesting that the commission would reject the filings.

Some issuers said they still plan to file additional disclosure documents with the SEC to continue discussions. Experts interviewed by the publication also allowed that spot ETH funds would only be approved after litigation initiated by some issuers following the rejection.

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Some applicants expect the SEC to reject the applications due to incomplete statistics on the ETH market. Thus, according to Bitwise head Matt Hougan, officials may point to the fact that not enough time has passed since the launch of futures ETH ETFs to collect the necessary data.

In turn, Todd Rosenbluth, head of ETF analysis at VettaFi, admitted that the approval of spot products will be delayed until the end of 2024.