Why Spot Ether ETFs Could Face a Difficult Path to Approval
The Securities and Exchange Commission (SEC) is considering applications for spot exchange-traded funds (ETFs) for ether (ETHUSD), the native token of the Ethereum blockchain and the second largest cryptocurrency by market capitalization. But experts are increasingly skeptical that approval will come any time soon.
The agency's approval of spot-bitcoin (BTCUSD) ETFs earlier this year turbocharged the demand for the cryptocurrency, propelling its price to multiple records, but an encore with ether appears less likely due to a number of factors.
The SEC has already delayed decisions on approvals for ether ETFs by Fidelity, BlackRock (BLK) and Grayscale, questioning whether the proposals are supported by the same arguments that led to the approval of the bitcoin funds, and over security concerns.
«My cautiously optimistic attitude for ETH ETFs has changed from recent months. We now believe these will ultimately be denied May 23rd for this round. The SEC hasn't engaged with issuers on Ethereum specifics. Exact opposite of #Bitcoin ETFs this fall,» Bloomberg Intelligence's James Seyffart wrote in an X post last week.
Industry watchers are skeptical that approvals will come in May, as scheduled, for a variety of reasons. Primary among them is the fact that ether is staked—a process in which cryptocurrency holders lock up their funds as collateral to support the operations of a blockchain network in exchange for rewards in the form of additional cryptocurrency.
On March 18, Fidelity added an amendment to its proposal to allow traders to stake some of the assets held, and a day later Grayscale amended its application to add staking as well.
Last year, the SEC cracked down on staking, fining cryptocurrency exchange Kraken
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