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The second-largest cryptocurrency by market capitalization, Ethereum, is the subject of proposals for spot exchange-traded funds (ETFs) that the U.S. Securities and Exchange Commission (SEC) is prepared to reject. The possibilities of the SEC and U.S. financial firms having negotiations in the recent past are not good for the approval of a spot Ethereum ETF in May.
Meetings between issuers like VanEck and ARK Investment Management and the SEC have left many disheartened. Participants report one-sided interactions, with little substantive dialogue on the proposed products. This starkly contrasts with previous in-depth discussions that paved the way for the approval of spot Bitcoin ETFs in January.
According to Reuters, the lack of engagement from the SEC has fueled speculation that the agency will reject the filings. Sources reveal that SEC staff refrained from articulating specific concerns or asking pertinent questions during these meetings. This lack of communication stands in contrast to the meticulous scrutiny applied to Bitcoin ETFs, which faced rejection in the past due to apprehensions about market manipulation.
The SEC had previously opposed Bitcoin ETFs, but it was compelled to reverse its position after Grayscale Investments won a victorious court battle. The similarities between Grayscale’s proposed spot Bitcoin ETF and previously authorized Bitcoin futures ETFs had a significant impact on the SEC’s decision.
Among the firms waiting on the SEC’s ruling are VanEck and ARK Investment Management. The SEC is anticipated to make a decision on VanEck’s and ARK’s filings by May 23 and May 24, respectively. Still, the general consensus seems to indicate that the SEC’s silence might portend bad news for those hoping for a spot Ethereum ETF.