SEC Likely to Deny Ether ETF Applications

SEC's Stance on Ether ETFs

U.S. issuers and firms anticipate the Securities and Exchange Commission (SEC) will reject their applications to launch exchange-traded funds (ETFs) linked to the price of ether. This expectation follows discouraging interactions with the agency. Companies such as VanEck and ARK Investment Management have filed to list ETFs that would track ether's spot price.

Recent Developments

The SEC has shown limited engagement in recent meetings with issuers, contrasting the detailed discussions held before approving spot bitcoin ETFs in January. Despite arguments from issuers that previously approved bitcoin and ether futures-based ETFs set a precedent for spot ether products, the SEC remains unresponsive to specific concerns. This suggests a likely denial of the filings.

Implications for the Crypto Industry

A rejection would be a setback for the crypto industry, which had hopes that spot bitcoin ETFs would pave the way for similar products, boosting cryptocurrency's mainstream presence. The regulatory landscape remains unclear, with some industry analysts predicting a delay in approval until 2024 or later.

Market Impact

The anticipation of a negative decision has influenced ether's market performance. While the cryptocurrency has increased by 39% this year, it lags behind bitcoin, which has risen over 51%. The expectation of denial has added downward pressure on ether's price.

Future Prospects

The SEC has conducted limited meetings on ether products, with only one disclosed meeting involving Coinbase concerning Grayscale's ETF application. The SEC previously approved spot bitcoin ETFs based on existing market surveillance for bitcoin futures ETFs. Applicants argue this rationale applies to spot ether products as well, given the correlation between ether futures and the spot market.

If the SEC rejects the applications, it may cite the need for more statistical data on the ether market. Some industry experts speculate that a rejection could lead to another lawsuit, potentially opening doors for future approval.