The likelihood of the SEC approving an Ethereum token exchange-traded fund (ETF) decreases with each passing day, according to Eric Balchunas, a senior ETF analyst at Bloomberg.
For those holding out hope for approval of Ether ETFs by May, the absence of contact from the Securities and Exchange Commission toward issuers about Ether ETFs might be a worrying indicator.
Bloomberg ETF expert Eric Balchunas told Cointelegraph that he has reduced the likelihood of Ether ETF approval to 35% for a number of reasons.
“The most important point is that the issuers have not received any comments or interaction from the SEC, and we are 73 days away from the final deadline. it is not a good indicator,” According to Balchunas.
“The SEC is required to provide feedback, which issuers must address and rectify.” According to Balchunas, “it’s somewhat of a prolonged process since they may need to resubmit and maybe even schedule some meetings.”
Furthermore, he said that he had obtained “excellent intel” which indicates the SEC could intentionally be withholding information from potential fund issuers.
Additionally, Balchunas mentioned that SEC Chair Gary Gensler’s position on Ether could be a factor. Gensler is believed to still view Ether as a security and might be reluctant to face the same “political blowback” that he experienced after the approval of the spot Bitcoin ETFs and the SEC’s legal defeat to Grayscale in August 2023.
“Additionally, I get the impression that he thinks he tossed a bone to the industry. When asked about his feelings over the court defeat,” he said, “All right, you should be pleased now. He then proceeded to eat crow.”
Gensler ultimately considers Ether to be a security. Unless he considered it a commodity similar to Bitcoin, he would be hesitant to give his approval. The cumulative effect of this detail is significant.
According to Balchunas, the process of establishing an Ether ETF is much different from what he went through during the spot Bitcoin ETF contest.
The fact that this was based on his subjective opinion, or “sixth sense,” was something he acknowledged, but he still said it was a major consideration in determining his chances of getting the ETF green light.
“The Bitcoin ETF race is experiencing something new. Something expanded and became more aggressive, whether it was our source, real public evidence, or just our gut sense. In a good way, everything nourished one another. Consequently, our chances of success increased. I feel like this is backwards.”
Noting that there was no rationale for the SEC’s decision to allow several ETH futures ETF products in October but not spot products in May, ETF Store president Nate Geraci made the observation in a post to X on March 11.
A rejection of the ETH ETF might be a good thing in the long run, according to Consensys chief counsel Matt Corva, who wrote about it in a post to X on March 11.
“If Ethereum collapses, their political controllers will smash them and they will have no arbitrary basis to combat against other currencies—this is a positive thing,” Corva remarked.
Coinbase, the largest cryptocurrency exchange, and Grayscale, an asset management firm, met with SEC officials on March 6 to explore a regulation change that would allow for the launch of spot Ether exchange-traded funds.
Many in the cryptocurrency community saw this as a good indication for the approval of an Ethereum ETF, but Balchunas cited a “strong” argument from VB Capital managing partner Scott Johnsson as the main reason why this may not be the case.
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