According to a Reuters report, U.S. issuers and crypto firms are bracing for the rejection of their applications to launch spot ether ETFs by the Securities and Exchange Commission (SEC). This news comes after a series of unproductive meetings with the SEC in recent weeks casting a shadow over the prospects of wider cryptocurrency acceptance.
Several industry sources familiar with the discussions reported that meetings with SEC officials regarding spot ether ETFs were one-sided and lacked substantive engagement. This stands in stark contrast to the detailed discussions preceding the SEC’s approval of spot bitcoin ETFs in January 2024.
Issuers argued that the SEC’s prior approval of spot bitcoin ETFs and ether futures-based ETFs set a precedent for spot ether products. They also addressed potential regulatory concerns. However, SEC staff reportedly remained unresponsive, suggesting a high likelihood of denial.
A potential rejection by the SEC would be a setback for the crypto industry, which had hoped that spot bitcoin ETFs would pave the way for similar products for other cryptocurrencies, bringing them into the mainstream.
Experts believe approval could be delayed until later in 2024 or even beyond. The cloudy regulatory environment surrounding spot ether ETFs further complicates the situation. Some issuers plan to submit additional disclosures to the SEC in an attempt to keep the conversation going.
The anticipated rejection is already weighing on ether prices. While Ether has seen a 39% rise in 2024, it lags behind Bitcoin’s impressive 51% surge. Market participants are factoring in potential rejection, leading to downward pressure on ether prices.
The SEC’s limited engagement on spot ether ETFs could be attributed to concerns regarding the depth and quality of data available on the underlying ether market. The relatively new ether futures market might also be a factor, as the SEC might seek more time to observe its behavior.
