The path toward approval of a spot Ethereum (ETH) exchange-traded fund (ETF) in the United States has taken a complicated turn in recent weeks, with developments casting a shadow over its immediate outlook. Expectations surrounding potential approval have suffered several setbacks, including a lack of communication between the Securities and Exchange Commission (SEC) and the ETF applicant, and the SEC’s ongoing investigation into the Ethereum Foundation regarding its classification of Ethereum. stock.
Accordingly, Bloomberg ETF analyst Eric Balchunas adjusted the odds of ETF approval to just 25% by May 23, the final deadline for one of the latest applications. The adjustment comes amid growing skepticism about the immediate future of Ethereum ETFs in US markets.
Why the Spot Ethereum ETF is Net Positive
In contrast to the general disappointment caused by regulatory delays, Coin Bureau CEO Nic Puckrin offers an optimistic outlook. eyesight In a post to “The probability for the Polymarket prediction market is 19%,” Percrine said. He added, “But isn’t this a good thing?”
Puckrin’s commentary examines the discrepancy between market expectations and reality, particularly in the context of the disappointing response to the Ethereum futures ETF launched in October of last year. He suggests that this incident essentially sets a precedent indicating that interest in physical products is unlikely to increase.
He argues that the rush towards alternative cryptocurrency products following the launch of the Bitcoin ETF may not meet the enthusiasm some expect. “The timing is not right,” Puckrin explained, highlighting the lack of immediate demand from a wide range of TradFi participants for an alternative product such as an Ethereum ETF.
Moreover, Puckrin questions the inherent appeal of an Ethereum ETF without a revenue-generating mechanism like staking. While these aspects of Ethereum’s utility are attractive to investors, the SEC’s evaluation process introduces a layer of complexity. “Unless the ETH ETF provides returns to its holders, it makes no sense for the fund to hold the ETF and invest in ETH spot and staking,” he said.
Regulatory scrutiny of Ethereum’s staking features is another key aspect of Puckrin’s argument. He points out that the SEC’s current interest in classifying ETH as a “security” primarily due to its staking features poses significant risks to the approval process.
“Don’t forget that the entire staking component is why Gary & Co are now seeking to classify ETH as a ‘security,’” Puckrin said, citing the potential impact such a classification could have on the broader Ethereum ecosystem and related financial products. The impact was emphasized.
Bitwise agree
Echoing Puckrin’s comments, Bitwise’s Matt Hougan said he favors delaying approval of all ETFs until December. In an interview with Forbes, Hougan made clear his belief that the Ethereum ETF market will become stronger and more attractive if the TradFi sector is given additional time to adapt to Bitcoin and the broader cryptocurrency ecosystem.
“I think Ethereum will be very attractive. I think an Ether ETF would be more successful if it launched in 12 months rather than in May. It may sound strange, but I think TradFi is still digesting Bitcoin. Give TradFi time to get used to Bitcoin and cryptocurrencies and they will be ready for the next step,” Hougan said.
As Puckrin noted, the potential delay could coincide with a burgeoning altcoin season and potentially a change in regulatory leadership at the SEC, setting the stage for a more favorable environment for the introduction and acceptance of Ethereum ETFs.
“By then, we could be well into the new altcoin season in earnest, with growing demand for alternative ETF products. If the latest polls are to be believed, we may be in the process of changing hands at the SEC,” Puckrin concluded, offering hope to the cloud of delays hanging over the prospects of the Ethereum ETF.
At press time, ETH was trading at $3,344.
Featured image from iStock, chart from TradingView.com