SEC Silence Lowers Ethereum ETF Approval Odds

Ethereum ETF approval odds drop as SEC silence persists, according to Bloomberg analyst Eric Balchunas.

The possibility of the U.S. Securities and Exchange Commission (SEC) approving an Ethereum ETF is looking increasingly unlikely, according to Eric Balchunas, a leading Bloomberg ETF analyst. With each day that passes without a word from the SEC, the dream of Ethereum enthusiasts and potential fund issuers for an ETF approval by May seems to fade further away.

Silence from the SEC

Balchunas, expressed his concerns about the lack of communication from the SEC. This silence is particularly alarming as the deadline approaches, now just over 70 days away. The SEC’s absence of feedback or directives to potential issuers is uncommon and suggests a less than favorable outcome.

The approval process for ETFs involves a series of communications between the SEC and issuers, including comments from the SEC that issuers need to address. The fact that such interactions have not occurred raises doubts about the approval of Ethereum ETFs.

SEC Chair Gary Gensler’s Stance

The analysis extends to SEC Chair Gary Gensler’s views on Ethereum. Gensler’s perception of Ethereum as a security, unlike Bitcoin, which he sees as a commodity, plays a significant role in the hesitancy to approve an Ethereum ETF. This stance, combined with the political repercussions Gensler faced following the approval of Bitcoin ETFs and a legal setback with Grayscale, further complicates the path to Ethereum ETF approval.

Balchunas suggests that Gensler’s experiences with previous ETF approvals and legal challenges have made him cautious. He implies that Gensler might believe the crypto industry should be content with the progress made so far, hinting at a reluctance to push for further advancements like an Ethereum ETF.

The journey toward an Ethereum ETF feels notably different from the Bitcoin ETF race. Where the process for Bitcoin ETFs seemed to gain momentum over time, the situation for Ethereum appears reversed. Despite initial optimism, the lack of public documentation, SEC feedback, and a general sense of enthusiasm has led Balchunas to adjust the odds of approval to a mere 35%.

Industry Perspectives

Despite these challenges, there are varied opinions within the crypto industry. Some, like ETF Store president Nate Geraci, find the SEC’s prior approval of Ethereum futures ETFs but reluctance on spot ETFs puzzling. Others, like Consensys general counsel Matt Corva, see a potential denial as a long-term positive, suggesting it could pave the way for broader acceptance of other cryptocurrencies.

A recent meeting between crypto giants Coinbase and Grayscale with SEC officials was seen as a hopeful sign. However, Balchunas points to a thesis by VB Capital’s Scott Johnsson, suggesting that the focus of the meeting on analytics rather than issuer discussions could indicate a leaning towards denial.

Looking forward, Balchunas highlights the upcoming U.S. presidential election as a critical date. Changes in administration or SEC leadership could dramatically impact the future of Ethereum ETFs. Despite the current hurdles, he remains optimistic about the eventual approval of a spot Ether ETF, emphasizing that it’s a question of “when” rather than “if.”