The discussion surrounding approving a spot Ethereum exchange-traded fund (ETF) by the US Securities and Exchange Commission (SEC) is intensifying as the decision announcement date rapidly approaches.
Bloomberg’s Senior ETF Analyst, Eric Balchunas, has shared a rather cautious outlook, estimating the likelihood of an ETH spot ETF receiving the green light at a mere 25%.
Ethereum Slight Chance To A Spot ETF Approval
Skepticism about the unlikelihood of a spot ETH ETF approval is rooted in what Balchunas perceives as deliberate non-engagement from the SEC rather than mere procrastination, leading to an absence of positive indicators for approval in the current environment.
Re Eth ETF approval, we are holding the line at 25% odds altho tbh it is a very pessimistic 25%. The lack of engagement seems to be purposeful vs procrastination. No positive signs/intel anywhere you look. Personally hope they do approve it but it just ain’t looking good.
— Eric Balchunas (@EricBalchunas) March 25, 2024
The debate over the SEC’s stance on a potential Ethereum spot ETF is nuanced, with opinions divided within the industry. On the one hand, Balchunas has expressed disappointment over the lack of encouraging signs for Ethereum spot ETF approval despite holding out hope for a positive outcome.
On the other hand, Craig Salm, Grayscale’s Chief Legal Officer, offers a different perspective, suggesting that the SEC’s silence should not be interpreted negatively.
2/ In the final months leading up to #Bitcoin ETF approval, @Grayscale and others received positive and constructive engagement from the SEC. We had thoughtful conversations and discussed the finer details of creation/redemption procedures, cash v. in-kind, APs, LPs, custody etc.
— Craig Salm (@CraigSalm) March 25, 2024
Salm argues that many operational details relevant to an Ethereum spot ETF have already been addressed during the approval process for the spot Bitcoin ETF, implying that fewer aspects might require engagement this time around.
Ethereum’s Market Performance Amid Regulatory Uncertainty
Despite varying opinions on the implications of the SEC’s current engagement levels, the agency’s actions indicate a cautious approach toward Ethereum and its classification.
Recent moves by the SEC, including issuing “subpoenas” to crypto firms about their interactions with the Ethereum Foundation, have fueled speculation about a campaign to classify Ethereum as a security.
This development, coupled with the regulatory body’s historical hesitance towards cryptocurrency ETFs, casts doubt on the immediate future of a spot ETH ETF.
Amid this regulatory uncertainty, ETH’s market performance has been noteworthy. In the past week alone, the cryptocurrency has seen a 10% increase in value, with its price trading above $3,500 at the time of writing.
Featured image from Unsplash, Chart from TradingView