Potential SEC denial reportedly looming for Ethereum ETFs

The U.S. Securities and Exchange Commission (SEC) is expected to deny applications for Ethereum exchange-traded funds (ETFs) tied to the price of the cryptocurrency. Financial firms in the U.S. have had discouraging meetings with the SEC in recent weeks, leading them to believe that spot Ethereum ETF approval will not happen in May, according to a Reuters report.

Several issuers, including VanEck and ARK Investment Management, have submitted filings with the SEC to list spot Ethereum ETFs. The SEC is required to make decisions on VanEck’s and ARK’s filings by May 23 and May 24, respectively.

However, the recent meetings between issuers and the SEC have been described as one-sided, with agency staff not engaging in substantive discussions about the proposed products. This lack of engagement is in stark contrast to the extensive and detailed discussions that took place before the SEC approved spot Bitcoin ETFs earlier this year.

The lack of engagement has led many to believe that the SEC is likely to reject the filings, as its staff did not express specific concerns or ask questions during the meetings. It is important to note that the SEC’s previous rejection of spot Bitcoin ETFs was due to concerns about market manipulation. However, the agency was ultimately forced to approve them after Grayscale Investments won a court challenge, demonstrating that its proposed spot Bitcoin ETF closely resembled the previously approved Bitcoin futures ETFs.

In related news, the SEC has also delayed the approval of Grayscale’s spot Ethereum ETF.