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Ethereum ETF Deadline Fast Approaching With Only ‘One-Sided’ Conversations from SEC

Last Updated April 9, 2024 3:37 PM
Shraddha Sharma
Last Updated April 9, 2024 3:37 PM

Key Takeaways

  • The Ethereum ETF decision faces a critical May deadline.
  • Reports highlight the lack of critical feedback from the SEC necessary for finalizing Ethereum ETF products.
  • CoinShares and VanEck CEO anticipate potential rejection of Ethereum ETF applications by the SEC.

As the decision deadline for Ethereum ETF approaches in May, discussions between ETF issuers and the Securities and Exchange Commission (SEC) have reportedly commenced with a unilateral tone. Reports note that despite numerous meetings, feedback from the SEC remains absent with issuers being pessimistic about the approval prospects.

One-Sided Conversations with the SEC

As per a report by Barron’s, the nature of interactions between ETF issuers and the SEC regarding the spot ether ETF have been “one-sided.” Despite attempts to engage in dialogue, the SEC has reportedly offered little to no feedback essential for the finalization of Ethereum ETF products. Lack of communication has left issuers pessimistic as the May 23rd deadline looms.

Jean-Marie Mognetti of CoinShares and Jan van Eck of VanEck are not optimistic about the May-end deadline. Jan van Eck told  CNBC that they and Ark Invest CEO Cathy Wood expect a likely rejection by the SEC.

Mognetti told the paper, “I don’t see anything being approved this side of the year,”

Approval Odds Low

The implications of the SEC’s silence are far-reaching. Not only does it affect the immediate future of Ethereum ETFs, but it also sets a precedent for how digital asset products might be treated in the future.

JP Morgan has indicated that failure to approve an Ethereum ETF by the deadline could lead to litigation. Nikolaos Panigirtzoglou, a JPMorgan market strategist, suggests that based on previous legal outcomes with companies like Grayscale and Ripple, the SEC might eventually lose such litigation. 

Meanwhile, Bloomberg analysts are keeping low odds of 25% on the approval. JP Morgan and Jan3 CEO Samson Mow have placed the approval odds at 50%. However, with May approaching, Polymarket  bets have gone down 78% to 17% at the time of writing.

On April 9, Ethereum’s price is mute but it is trading above the $3,600 mark. Meanwhile, Defiance ETF has also submitted  a proposal to the SEC for the first 2x leveraged Ethereum futures ETF.

It is expected to be under the ticker “ETHL” and aims to offer double the daily return of Ethereum’s futures. As per Bloomberg analyst James Seyffart, the development comes after Defiance ETFs’ recent filing for a 2x leveraged ETF tied to the performance of MicroStrategy Incorporated (MSTR). The new Ethereum futures ETF is projected to trade around late June.

ETF Approval Odds Not Zero

The path to regulatory approval for the Ethereum ETF is fraught with hurdles. Reports underline the issuers’ engagement with the SEC as one-sided.

Meanwhile, industry leaders are bracing for a potential rejection. The lack of feedback and forthcoming dialogue from the SEC is negative but the odds are still not zero. With the deadline fast approaching, all eyes are on the next SEC commentary.

Slug: Ethereum-ETF-deadline-approval-odds

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