Ethereum ETF: Approval by ‘late May,’ or only ‘25% odds’?

• Grayscale’s CLO reiterated the SEC’s strong case for Ether ETF approval. 
• Commodity futures also suggested potential for spot Ether ETF approval.

2024 has been a significant year for the cryptocurrency market, marked by strong recovery in prices and investor confidence.

With the success of Bitcoin [BTC] ETFs, attention has turned to the possibility of an Ethereum [ETH] ETF.

However, while optimism surrounding an Ethereum ETF approval is high, several factors suggested that caution may be warranted.

Craig Salm, Grayscale’s chief legal officer, has provided clarity, asserting SEC’s strong case for approval. He noted, 

“Perhaps I will feel differently as we get closer to final approve/deny dates in late May 2024, but at this point, I don’t think perceived lack of engagement from regulators should be indicative of one outcome or another.” 

The growing speculation 

Salm further outlined that issues related to spot Ethereum ETFs were largely addressed before spot Bitcoin ETFs were approved. He emphasized,

“All of these issues were figured out and are identical when comparing spot #Bitcoin to  #Ethereum ETFs. The only difference is rather than the ETF holding bitcoin, it holds ether.”

He further added, 

“So in many ways, the SEC already has engaged and issuers simply have less to engage on this time.”

However, integrating staking into spot Ether ETFs may pose additional challenges for applicants like Ark 21Shares, Fidelity, and Franklin Templeton.

Contrary to the optimism, Bloomberg analyst Eric Balchunas commented,

“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.” 

He further noted, 

“No positive signs/intel anywhere you look. Personally hope they do approve it but it just ain’t looking good.”

What lies ahead of Ether ETFs? 

Salm also suggested that the recent approval of Ether Futures ETFs, classified as commodity futures, could pave the way for spot Ether ETFs.

This sentiment was echoed by other industry experts, including Coinbase’s Paul Grewal and former CFTC commissioner Brian Quintenz. 

Thus, with a range of prominent applicants such as BlackRock, VanEck, and Fidelity, awaiting SEC approval for spot Ether ETFs, the decision deadline for VanEck’s application is eagerly anticipated.