Industry Sources Say SEC Likely to Reject Spot Ether ETFs Next Month: Reuters

The wait for ether ETFs in the U.S. is turning tense. Companies hoping to launch these financial instruments, which track the price of ethereum, are facing an uphill battle with the SEC. Recent meetings have been one-sided, with the SEC offering little feedback and issuers feeling their arguments are falling on deaf ears. This stands in stark contrast to the detailed discussions that preceded the landmark approval of spot bitcoin ETFs in January.

This lack of engagement hints at a potential rejection, a major blow to the crypto industry. Spot bitcoin ETFs were seen as a stepping stone for similar products, potentially ushering cryptocurrencies into the mainstream. Now, that path seems clouded. Reuters reported that industry experts believe approval could be delayed until later in 2024, or even longer.

Some issuers are holding onto hope, planning to submit additional disclosures to keep the conversation going with the SEC. However, the mood is cautious. VanEck's CEO himself expects their application to be rejected, and ARK Investment Management remains silent on the matter. This pessimism is reflected in ether's price, which is lagging behind bitcoin's impressive gains this year. Investors seem to be anticipating a thumbs-down from the SEC.

The core of the SEC's hesitation likely lies in data. The agency may argue that the ether market, while established, lacks the depth of statistical data compared to bitcoin. They might also point to the limited time they've had to observe ether futures, a key factor in approving spot bitcoin ETFs. This could lead to a request for "more data" before approving ether ETFs.

While a rejection would be a setback, it might not be the end of the road. Some speculate it could trigger another legal battle, similar to the one that forced the SEC's hand on bitcoin ETFs.

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Reuters