March 12, 2024 at 12:02 GMTModified date: March 12, 2024 at 12:02 GMT
March 12, 2024 at 12:02 GMT

Approval of Ethereum ETF unlikely as SEC remains silent

Silence from the SEC to potential Ethereum (ETH) ETF issuers has led analysts to believe that approval is unlikely.

Approval of Ethereum ETF unlikely as SEC remains silent

As the approval deadline for Ethereum ($ETH) exchange-traded funds (ETFs) looms, concerns are growing due to the absence of communication from the US Securities and Exchange Commission (SEC) to issuers, casting doubt on the possibility of approval by May. 

Eric Balchunas, a senior ETF analyst for Bloomberg, expressed pessimism, noting that the chances of an Ether ETF approval by the deadline have decreased to 35%. 

He said on social media platform X (formerly Twitter): “I get all the reasons they SHOULD approve it (and we personally believe they should) but all the signs/sources that were making us bullish 2.5mo out for btc spot are not there this time.”

Talking to CoinTelegraph, Balchunas said: “We’re 73 days from the final deadline, and there’s been no contact or comments from the SEC to the issuers. That’s not a good sign.”

Many investors are hoping for a positive outcome similar to the recent approval of spot Bitcoin ($BTC) ETFs. However, the current silence from the SEC suggests a different trajectory for Ethereum-based financial products.

Is Gary Gensler opposed to an Ethereum ETF?

SEC Chair Gary Gensler’s views on Ethereum might influence the commission’s decision on approving an Ethereum ETF. There is speculation that Gensler, who is considered to see Ether as a security, may not be inclined to support an Ethereum ETF due to the backlash he faced after the approval of Bitcoin ETFs and the SEC’s legal defeat to Grayscale in August 2023.

However, Gensler has not provided any definitive signals regarding the SEC’s stance on an Ethereum ETF. In a recent interview with Yahoo Finance, he carefully avoided giving a clear response to questions about the possibility of Ether ETF approvals. “I don’t want to prejudge any one filing,” Gensler remarked, acknowledging that there are multiple applications under consideration. 

He added, “So, news alert, I’m not going to prejudge that. But to your question, we look at the facts and circumstances and that which was in front of us.”

Bitcoin ETF approval and the recent crypto rally

The situation with Ether ETFs starkly contrasts with the recent successful approval and launch of Bitcoin ETFs. 

In January 2024, the SEC approved 11 Bitcoin ETFs, marking a significant milestone for cryptocurrency adoption and attracting a new wave of investors. However, the Ether ETF application process has been less optimistic, with initial high hopes now dampened due to the SEC’s silence.

Eric Balchunas initially projected a 70% likelihood for Ethereum ETF approval, but has since revised this to 35% amid growing regulatory uncertainties. Despite this, the overall cryptocurrency market has shown resilience, with Bitcoin reaching new highs and the total market capitalisation surging.

At the time of writing, Ethereum is trading just below $4,000, still yet to reach a record high, unlike Bitcoin which has continued to set new benchmarks.