The SEC is expected to turn down requests for spot Ethereum ETFs following unproductive discussions with issuers.
The U.S. Securities and Exchange Commission (SEC) is likely to reject applications for spot exchange-traded funds (ETFs) linked to the value of Ethereum, the second-largest cryptocurrency by market capitalization. Financial institutions in the U.S. do not foresee approval for spot Ethereum ETFs happening in May, as recent meetings with the regulatory body have been disheartening, as per a report from Reuters.
VanEck, ARK Investment Management, and seven other entities have already filed applications with the SEC to launch spot Ethereum ETFs. The SEC is expected to make decisions on VanEck’s and ARK’s applications, which are the first in line, by May 23 and May 24 respectively, according to the report.
Recent discussions between issuers and the SEC have reportedly been one-sided, with SEC staff not engaging in substantive conversations about the proposed ETFs. This lack of communication is in stark contrast to the thorough and detailed talks that preceded the approval of spot Bitcoin ETFs in January.
The absence of meaningful dialogue has led many to speculate that the SEC will likely reject the applications, as staff members did not raise specific concerns or ask questions during the meetings. It is important to note that the SEC’s previous denial of spot Bitcoin ETFs was due to worries about market manipulation. However, the agency was eventually compelled to approve them after Grayscale Investments successfully challenged the decision in court, proving that their proposed spot Bitcoin ETF closely resembled the previously authorized Bitcoin futures ETFs.