SEC Anticipated To Reject Spot Ethereum ETFs In Upcoming Decision, ETH Price Takes 5% Hit

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As someone who closely follows the cryptocurrency market, I find the current situation surrounding Ethereum ETFs quite concerning. The recent price drop in Ethereum, which stands at around 5%, is a clear reflection of investors’ growing anxiety over the impending decision from the US Securities and Exchange Commission (SEC).

I’ve noticed over the last day that Ethereum, the cryptocurrency with the second-largest market capitalization after Bitcoin, has undergone a sizable 5% price decrease. This decline coincides with increasing rumors that the anticipated Ethereum Exchange Traded Funds (ETFs) might face rejection from the US Securities and Exchange Commission (SEC) when they’re up for review in May.

US Bitcoin ETF Issuers Brace For SEC’s Expected Denial

Based on a current Reuters article, several organizations in the United States that have applied for Bitcoin ETFs linked to Ethereum’s price expect the Securities and Exchange Commission (SEC) to reject these proposals.

Based on information from four people privy to the situation, the applicants have had demotivating interactions with the regulatory agency in the past few weeks, leading to heightened anticipation.

I’ve noticed some notable investment firms, including VanEck and ARK Investment Management, along with seven others, have made filings with the Securities and Exchange Commission (SEC) to propose Ethereum-tracking Exchange-Traded Funds (ETFs). These ETFs aim to mirror the price of Ethereum in the market.

VanEck’s application, being the earliest submitted, will be reviewed by the SEC with a decision expected by May 23. Similarly, ARK’s application, submitted next in line, is scheduled for the SEC’s decision by May 24.

As an observer, I’ve gathered information from various sources regarding the interactions between Bitcoin ETF applicants and the Securities and Exchange Commission (SEC). According to these sources, the conversations have predominantly taken a one-sided form. The SEC staff appears to be focusing more on expressing their concerns rather than delving into substantial details about the proposed Bitcoin ETF products.

Before the Securities and Exchange Commission (SEC) granted landmark approvals for bitcoin spot ETFs in January, there were intense and intricate exchanges between the issuers and the agency. This can be rephrased as: The communications leading up to the SEC’s approval of bitcoin spot ETFs in January were markedly more extensive and meticulous than usual.

During the meetings, the proponents of these financial products contended that the SEC’s approval of Bitcoin spot ETFs and Ethereum futures-backed ETFs in October established a significant precedent. In making their case, they also worked to allay any regulatory apprehensions.

I observed that despite the heated debates, the SEC staff failed to provide clear explanations for their concerns or actively engage in constructive conversation, which could be an indication of declining the requests under consideration.

Setback For Crypto Industry

From my perspective, if the approval of spot Bitcoin ETFs fails to materialize as expected, it would be a disappointing turn of events for the cryptocurrency industry. We had anticipated that this approval would serve as a catalyst for the development of similar products and ultimately help propel cryptocurrencies further into mainstream acceptance.

Based on the assessment of Todd Rosenblith, the head of ETF analysis at VettaFi, the uncertain regulatory outlook stems from the expected postponement of decisions on approvals or rejections until late in 2024 or even beyond.

I’ve observed that some companies have mentioned their plan to provide more documentation to the Securities and Exchange Commission (SEC) in hopes of continuing the dialogue. However, the general feeling among many is that these applications are likely to be denied.

Jan van Eck, the CEO of VanEck, has previously expressed his expectation that their application will probably be denied, whereas ARK Investment Management has remained silent on the issue.

Rejected Ethereum ETFs Could Spark Potential Court Battles

Applicants for Ethereum-based ETFs anticipate that the Securities and Exchange Commission (SEC) may base their rejection decisions on more comprehensive issues related to the ETH market’s statistical data. In simpler terms, some applicants believe that the SEC might reject their proposals due to concerns about the quality or extent of the data used to analyze the Ethereum market.

Matt Hougan, the CIO of Bitwise Asset Management, which has applied for an Ethereum ETF with the SEC, thinks the regulatory body might need extra time to examine Ethereum futures markets and collect further information before making a decision.

Experts in the industry believe that the SEC’s decision to refuse Ethereum ETF proposals might prompt lawsuits. One industry insider hinted that courts could intervene prior to the approval of Ethereum ETFs.

I’ve noticed that the expected rejection has been affecting Ethereum’s price recently. According to Hong Fang, the president of OKX crypto exchange, this downturn is due to investors taking into account the possibility of an unfavorable result.

SEC Anticipated To Reject Spot Ethereum ETFs In Upcoming Decision, ETH Price Takes 5% Hit

At present, ETH is priced around $3,100, underscoring its prolonged slump in the larger market context. Over the last two weeks and a month, there have been substantial drops of approximately 12% and 14% in the token value respectively.

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2024-04-25 18:05