Anticipation is building as the potential approval of Ether exchange-traded funds (ETFs) in May approaches, but opinions among analysts and investors are divided. Bloomberg analysts suggest that the chances of spot Ether ETF approval in May have decreased due to regulatory concerns.
As the Securities and Exchange Commission (SEC) prepares to make a decision, there is still uncertainty surrounding regulatory clarity and how the market will react. The analyst from Bloomberg ETF believes that spot Ether ETFs will ultimately be denied on May 23, citing the lack of involvement of U.S. regulators with potential issuers.
Seven issuers, including BlackRock, Fidelity, Invesco with Galaxy, Grayscale, VanEck, 21Shares with Ark, and Hashdex, have expressed interest in launching an Ether fund. However, unlike the exhaustive deliberations that took place before the approval of spot Bitcoin ETFs in January, the SEC and issuers of spot Ether ETFs have not engaged in lengthy discussions.
The approval of spot Bitcoin ETF products by the SEC was seen as a positive step for the industry. Chairman Gary Gensler stated that the approval was consistent with exchange-traded products (ETPs) that hold a single non-security commodity like Bitcoin. The approval was also influenced by the SEC’s August court loss to Grayscale Investments.
The argument made by Grayscale was that since the SEC had approved Bitcoin futures ETFs, it would be unfair to deny spot BTC products. Following Grayscale’s legal victory, ten spot Bitcoin ETFs have been traded on US markets in the past ten weeks.
Industry observers point to the fact that the US securities regulator authorized trading in Ether futures ETFs in October, suggesting that spot Ether ETFs are inevitable. These funds contain futures contracts that are traded on the Commodity Futures Trading Commission-regulated Chicago Mercantile Exchange (CME).
However, a recent crypto report revealed that the SEC has issued subpoenas to multiple US companies in connection with their transactions with the Ethereum Foundation. This has sparked a debate about whether Ether is considered a commodity or a security, which could impact the SEC’s approach to regulating Ether ETFs.
Despite these developments, industry executives, including Paul Grewal, the chief legal officer of Coinbase, believe that the SEC has no valid reason to deny spot Ether ETF applications. They argue that the SEC has repeatedly endorsed the regulatory status of Ether and should not question it now.