The Ethereum spot ETF has about a 60% chance of being approved in May
According to Bloomberg Intelligence analyst James Seyffart, spot Ether ETFs have about a 60% chance of being approved by May.
Earlier this week, the US Securities and Exchange Commission (SEC) delayed decisions on potential BlackRock and Grayscale Ethereum ETFs.Along with BlackRock and Grayscale, Ark 21Shares and VanEck are also in the running for a spot Ether ETF.
The delay is not surprising according to experts, who expected the SEC to postpone a decision on the ETH ETF until later this year. The SEC, earlier this month, approved a series of Bitcoin ETFs.
Seyffart is targeting May 23 as the next day to watch the Ether spot ETF story. May 23 marks the 240-day deadline for the SEC to decide on the proposals from Ark/21Shares and VanEck.
“My base case is probably that there are still about 60% of the SEC that will approve them” around that date. But there are lots of ways they can delay.
” “So if the SEC is prepared it will probably do it on May 23rd unless they can find some way to opt out or delay this whole process and do what they want ”.
If the May approval is unsuccessful, Seyffart plans to look into 2025.
Grayscale is taking a similar approach to its Bitcoin ETF by attempting to convert the Grayscale Ethereum Trust (ETHE) into an ETF.
The company is considering the SEC's decision in the summer of 2024, the company's chief legal officer Craig Salm said in an interview.
“That clock is due this summer,” he said.
The Bitcoin ETF application was initially rejected, prompting the company to file an appeal. Back in August, a jury sided with Grayscale, causing the SEC to reconsider the application.
“It can be said that this ruling has opened the gates for BTC. And also puts the SEC in an awkward position,” said Scott Johnsson, general partner at Van Buren Capital.
Fast forward to January and Grayscale was one of the companies approved to launch an ETF. This is also the fund that recorded the highest outflow since the ETFs went into operation earlier this month.
Johnsson offered further insights into the potential roadmap for the ETH spot ETF in an X post on Thursday.
” However, the SEC could choose to ask potential issuers to withdraw their applications or issue a denial as the May deadline approaches. If the SEC asks Ark/21Shares or VanEck to withdraw, it would be “a good sign that the SEC will approve these,” Seyffart said.
“SEC may need more time to get up to speed between Ethereum and Bitcoin.
Johnsson said caution is warranted when adopting spot ETFs.
Johnsson believes that the existence of Ethereum futures ETFs is a bright spot for a potential green light, after seeing that the SEC has approved Bitcoin ETFs partly on that basis.
Seyffart added that the SEC could say that the futures market is not “large enough, liquid enough or impactful enough” when considering spot Ether ETFs.
However, as May approaches, there will be clues that “inform” the public about what the SEC is thinking. These include filings and responses from both the issuer and the SEC.
Johnson said:
“I certainly wouldn't be surprised if the SEC decides to avoid the D.C. Circuit at all costs and just grant approval.”
SEC Commissioner Hester Peirce, in an interview earlier this week, said that the SEC “doesn't need a court to tell us that our approach is arbitrary and capricious to get it right.”
