Spot Ethereum ETFs Face Regulatory Roadblocks from SEC

Regulatory Roadblocks: SEC Delays Approval of Ethereum ETFs

Experts point out that these further approvals may be the critical factor in uplifting ETH's valuation even in the wake of the short-term price downturn.

The report by Reuters suggests that the myriad of applications for spot Ethereum ETFs (exchange-traded funds) will top the list of SEC to-dos for May.

The authorities' latest views imply a negative prohibition from the regulator, which comes with solid skepticism under the supervision of Chair Gary Gensler.

However, some applicants strongly anticipate the adverse decision, as they are lost in translating deep and broad statistical data about ether's underlying market size.

As expected, U.S.-based issuers, including the American firm VanEck, as well as ARK Investment Management Company, have faced SEC rejections as they likely were discussing with no success. The applications of VanEck and ARK for the issuance have deadline dates of May 23 and May24. Implementers would say that the SEC should intently follow the approach of approving Bitcoin spot Ethereum ETF – their argument. Thus, what differentiates the SEC's examination of precedent technology products from its current position towards spot Ethereum ETFs is the high level of rigor that the SEC applies to the previous products. It possibly denotes the ban on exchanges and its persistent concerns about manipulations by some entities in the market and the maturity or otherwise of the existing market mechanisms.

Just recently, Standard Chartered even stated that markets should not wait for the SEC's approval of the Ether (ETH) Spot Ethereum ETFs earlier in May.

Optimistic Outlook

Nevertheless, some scenarios might lead to failures. Yet, according to Jupiter Zheng, a senior analyst from HashKey Capital, the industry has a bright future. Even if the Spot Ethereum ETFs decision is rejected, it may, in fact, only be a speed bump instead of a brick wall, according to an interview with Zheng via CoinTelegraph.

Additionally, Zheng also believes that there will be a shoeshine effect from an ETF approval that involves the staking process, which may attract more foreshortening and, in turn, stabilize ETH higher. Crypto investors such as Jelle testify that recent events around the halving of Bitcoin could have a bearish turn for Ethereum in the market. The parallels could still come up.

Comparative Analysis

Crypto analysts have made an about-turn and now maintain that there is just a 35% chance of endorsing a bitcoin ETF, according to Bloomberg's Eric Balchunas. This is an opposite example of the general bankruptcy of thought among financial experts since the reserve bank does not fully appreciate the place of crypto in society.

Although there is a real chance of rejection, physical Ethereum ETFs are also highly likely to see sustained development. Issuers are in the process of crafting new details that they hope will keep the talks going with the SEC and return this project to the discussion table.

Though the supposed denial may only be in its early days, the market has already reflected it in low market performance and lagged in cryptocurrency gains all through the year. Ethereum, $ETH, has stabilized a pullback of 5.6% over the last 24 hours, with a current price of $3086.