Bloomberg Says Odds Of SEC Approving Ethereum ETFs ''Slim To None'' As New Filing Details Emerge

Bloomberg Says Odds Of SEC Approving Ethereum ETFs ”Slim To None” As New Filing Details Emerge

Updated: 15 May 2024

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Bloomberg says the chances of the US Securities and Exchange Commission (SEC) approving spot Ethereum ETFs (exchange-traded funds) this month are “slim to none” as new filing details emerge.

This view comes after analysts uncovered details from a March filing with the SEC that seem to suggest the regulator is considering labeling the largest altcoin by market cap a security.

SEC Asks Public If BlackRock’s Ethereum ETF Can Be Filed As A Commodity

Davis Polk and Wardwell Associate Scott Johnsson analyzed a March 4 filing from leading asset manager BlackRock to list its spot ETH ETF on Nasdaq. In addition to delaying the deadline for the SEC to deliver a decision on BlackRock’s application until June, it also called for public feedback on whether the fund could be filed as a commodity.

I'm aware this is widely considered a possibility, but this is your official notice that the SEC is considering the security question for ETH in this upcoming spot ETF order. Note that this question was never (afaict) asked regarding a spot/futures BTC ETF product. pic.twitter.com/TwhqmTnJfC

— Scott Johnsson (@SGJohnsson) May 14, 2024

The question was never asked in the run up to the approval of spot Bitcoin ETFs, according to Johnsson.

The regulator can “deny on the basis that these spot filings are improperly filed as commodity based trust shares,” Johnsson said on X. This would mean that the funds “do not qualify if they are holding a security.”

The SEC is perhaps considering Ethereum as “a security in their denial,” added senior Bloomberg ETF analyst Eric Balchunas in a May 14 X post. “It was literally buried 50 feet deep in a pile of legalese.”

SEC Likely Considering Labeling ETH A Security

Bloomberg ETF analyst James Seyffart said the filing increases the odds of a denial, adding that the request for public feedback “almost guarantees” that the regulator is considering labeling ETH a security.

Looks like odds just went up for SEC to deny Ethereum ETFs by claiming #Ethereum is a security. Not a guarantee that they will do this but i think this almost guarantees that the SEC is at least considering it. (not groundbreaking but first i've seen in public SEC documents) https://t.co/JK7M9G9Ttu

— James Seyffart (@JSeyff) May 14, 2024

VanEck’s spot ETH ETF is the first filing that might get rejected, with the final deadline for the SEC to deliver a decision set for May 23.

Should the regulator choose to reject that application, the commission would likely do the same for the spot ETH ETFs filed by Hasdex, ARK21Shares, Invesco Galaxy, Fidelity and BlackRock.s