Ethereum ETF Providers Scheduled to Hold Meeting with SEC in March

Multiple issuers are competing to establish an Ethereum ETF after the successful launch of Bitcoin ETFs. However, the road ahead may be challenging, as the SEC delays decisions and commissioner comments add uncertainty to the process.

Reuters reports that the U.S. SEC and applicants for a spot Ethereum (ETH) ETF will meet next month to discuss bids for these investment vehicles. Although there is no official meeting listed on the SEC’s public log, two sources familiar with the matter confirm the upcoming meeting.

Decisions regarding spot Ether-based products have been postponed until at least May, with VanEck’s filing being the first in line. The SEC must accept or reject VanEck’s bid by May 23, while other issuers such as BlackRock, Franklin Templeton Grayscale, and Invesco Galaxy are also awaiting a response.

Spot Ethereum ETF bids were submitted last year, following the applications for spot Bitcoin ETFs. The SEC approved the Bitcoin (BTC) products, and trading began for nearly a dozen funds on January 11.

This approval came after years of rejection by the SEC, which cited concerns about market manipulation as the primary reason for denial. The SEC also approved futures-based crypto products during this time, but this decision was later deemed “arbitrary and capricious” by a three-judge panel, including Judge Neomi Rao, during a Grayscale lawsuit against the SEC. This ruling is considered a turning point in the effort to legitimize widespread crypto adoption and investment in the U.S., as spot BTC ETFs were authorized a few months later.

However, experts note that spot ETH ETFs may face a different review process. One key difference between Bitcoin and Ethereum is how the SEC perceives both products. After approving the spot BTC ETFs, SEC Chair Gary Gensler referred to Bitcoin as a non-security commodity, while the security classification of Ethereum remains unclear.

Additionally, the two blockchains operate on different technological models. Bitcoin uses proof-of-work, while Ethereum has transitioned to a proof-of-stake design in 2022. This model allows ETH holders to stake their assets in exchange for yield, a process that has been closely scrutinized by the SEC and used as a focal point by the regulator to argue that existing financial regulations are sufficient for overseeing crypto assets.

Furthermore, the SEC has not engaged in dialogue with issuers as it did prior to approving spot BTC ETFs. Gensler has stated that all five commissioners will vote on the bids, but he emphasized that previous decisions do not imply overall support for cryptocurrencies.

Commissioner Hester Peirce commented that the SEC should not require a court case to prompt action, while Grayscale CEO Michael Sonneshein stated that it is too early to determine if the company will need to sue the SEC again.

Crypto industry stakeholders, including Coinbase, have urged the SEC to approve Grayscale’s spot ETH ETF application, which aims to convert a $7 billion trust into an exchange-traded fund. The crypto exchange has also requested more transparent crypto regulations from the SEC.

In the midst of efforts to gain SEC approval for Ether ETFs that track spot prices, ETH has seen a price increase of over 42% in the last 30 days, according to CoinMarketCap. Experts at Grayscale believe that the hype surrounding spot ETH ETFs has contributed to this rally, but they attribute the majority of the increase to anticipation of the Dencun upgrade.

Overall, the path to establishing an Ethereum ETF faces challenges, but the crypto industry remains hopeful for progress in the future.