Grayscale CLO expects SEC greenlight for Ether ETFs on the horizon by May

Grayscale’s CLO, Craig Salm, predicts that the SEC will approve spot Ether (ETH) exchange-traded funds (ETFs) by May 2024. Salm’s optimism is based on the SEC’s previous meetings with Grayscale before the approval of Bitcoin ETFs. These meetings discussed important operational aspects such as creation/redemption procedures, cash versus in-kind contributions, authorized participants (APs), liquidity providers (LPs), and custody issues.

Salm argues that the case for Ethereum ETFs is similar to that of Bitcoin ETFs, as many of the previously resolved issues for Bitcoin ETFs are directly applicable to Ethereum ETFs. The primary difference between the two products is the underlying assets. Salm believes that the SEC has already engaged to a certain extent, and issuers have less to engage with this time.

Salm also mentions the recent approval of Ether Futures ETFs and their classification as commodity futures, which he sees as another argument for a favorable regulatory outcome. He believes that the high correlation between futures and spot products strengthens the case for the approval of spot Ether ETFs.

Salm points out that other industry insiders, like Paul Grewal, share these sentiments. Grewal, the chief legal officer for Coinbase, argues that there is “no good reason” for the SEC to deny ETH ETP applications. He refers to statements from several SEC officials who have stated that ETH is not a security measure.

However, not all industry observers are as optimistic as Salm. Bloomberg ETF analysts Eric Balchunas and James Seyffart have expressed concerns over the SEC’s lack of engagement and have lowered their expectations for an approved spot Ether ETF in May to 25%. Balchunas perceives this stance as intentional rather than mere procrastination.

Currently, the SEC has received filings from various companies, including BlackRock, VanEck, ARK 21Shares, Fidelity, Invesco Galaxy, Grayscale, Franklin Templeton, and Hashdex. The deadline for VanECK’s application is May 23.