SEC’s silence regarding Ethereum ETF deemed “unpromising” by Bloomberg analyst

The United States Securities and Exchange Commission’s silence on Ether (ETH) exchange-traded funds (ETFs) is raising red flags for hopeful issuers eyeing approvals by May.

In a discussion with Cointelegraph, Bloomberg ETF analyst Eric Balchunas confidently downgraded the likelihood of Ether ETF approval to a mere 35%. Balchunas highlighted the critical absence of communication from the SEC to issuers, signaling a troubling lack of progress just 73 days away from the final deadline.

“The SEC’s silence speaks volumes,” Balchunas emphasized. “Without feedback, issuers can’t address potential concerns or make necessary adjustments, elongating an already complex process.”

Furthermore, Balchunas shared insights suggesting that the SEC’s deliberate silence might be strategic, indicating a challenging road ahead for prospective fund issuers.

Drawing attention to SEC Chair Gary Gensler’s stance on Ether, Balchunas underscored the lingering perception of Ether as a security, a viewpoint potentially hindering approval. Gensler’s cautious approach stems from past experiences, including political backlash following the approval of Bitcoin ETFs and a significant court defeat against Grayscale in August 2023.

“From Gensler’s perspective, there’s little incentive to rush approval,” Balchunas explained. “He views Ether through a regulatory lens, reluctant to greenlight unless it’s unequivocally deemed a commodity akin to Bitcoin. It’s a stance that carries weight in the decision-making process.”

In sum, Balchunas’ assessment reflects a landscape where regulatory uncertainties and institutional perspectives converge, shaping the trajectory of Ether ETF approvals with caution and meticulous scrutiny.

Something feels off

Balchunas confidently asserted that the Ether ETF process presents a stark contrast to the journey of the Bitcoin ETF. While acknowledging the subjectivity of his perspective, he emphasized the significance of intuition in shaping his outlook. Despite not being the sole determinant, he underscored its importance in guiding his assessment.

“The dynamics surrounding the Ether ETF are distinctly different from those of the Bitcoin ETF race,” Balchunas asserted. “Whether it’s the depth of our research, the clarity of public documentation, or simply our gut feeling, every aspect seems to contribute to a growing bullish sentiment. Each piece of information reinforces the others positively, naturally elevating our confidence. It’s a reversal from what we’ve seen before.”

In a March 11 update, ETF Store president Nate Geraci observed the perplexing nature of the SEC’s decision to greenlight multiple ETH futures ETFs in October but withhold approval for spot products in May, noting the lack of clarity in their rationale.

Meanwhile, Matt Corva, general counsel at Consensys, expressed optimism about the potential denial of an ETH ETF, viewing it as a strategic move with long-term benefits.

“If the SEC rejects ETH ETFs, they’ll face backlash from their political influencers, leaving them with little ground to discriminate against other cryptocurrencies. Ultimately, this could pave the way for positive developments,” Corva explained.

On March 6, industry giants Coinbase and Grayscale engaged with SEC officials to discuss a rule change for launching spot Ether exchange-traded funds. While many in the crypto sphere interpreted this as a positive indicator for ETF approval, Balchunas turned to a compelling argument by VB Capital’s Scott Johnsson, highlighting the complexities underlying the decision-making process.

Johnsson emphasized that the meeting did not involve potential fund issuers but rather focused extensively on analyzing the correlation between ETH and BTC futures prices in comparison to spot prices.

This correlation analysis serves as a pivotal factor for approving or rejecting the ETF, with Johnsson leaning towards the likelihood of denial, a sentiment shared by Balchunas.

Discussing potential scenarios, Balchunas highlighted the significance of the U.S. presidential election on Tuesday, Nov. 5. Regardless of the election outcome, Balchunas noted the potential for changes in regulatory leadership, impacting the decision-making process at the SEC.

Expressing confidence, Balchunas stated that the approval of a spot Ether ETF is a matter of “when” rather than “if.” He firmly believed that approval is inevitable, though the exact timing remains uncertain.

“Inevitably, as time progresses, these matters will be resolved,” he concluded confidently.


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