Grayscale Sees Ethereum ETF Approval In May, Despite Lack of SEC Engagement

Updated: 26 March 2024

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Grayscale expects an Ethereum ETF (exchange-traded fund) to be approved by the Securities and Exchange Commission (SEC) in May, despite the regulator’s lack of engagement with applicants.

That’s because many of the tricky issues around crypto ETF issuance were settled between the SEC and fund managers for the launch of Bitcoin ETFs in January, said Grayscale’s chief legal officer, Craig Salm, in a Mar. 25 post on X.

“In the final months leading up to Bitcoin ETF approval, Grayscale and others received positive and constructive engagement from the SEC,” he said. ”All of these issues were figured out and are identical when comparing spot Bitcoin to Ethereum ETFs. The only difference is rather than the ETF holding bitcoin, it holds ether. So in many ways, the SEC already has engaged and issuers simply have less to engage on this time.”

1/ Recently, there’s been a lot of chatter about spot #Ethereum ETFs. I personally am not deterred by it and believe the ETFs should be approved. But right now I want to talk about how I think perceived “lack of SEC engagement” should be viewed at this point:

— Craig Salm (@CraigSalm) March 25, 2024

Bloomberg Pessimistic Over Ethereum ETF Approval In May

Bloomberg ETF analyst Eric Balchunas last week slashed the odds of Ether ETFs gaining approval in May to a meager 25%, from 35% on Mar. 11, citing the lack of a SEC engagement with fund managers as a key issue.

Re Eth ETF approval, we are holding the line at 25% odds altho tbh it is a very pessimistic 25%. The lack of engagement seems to be purposeful vs procrastination. No positive signs/intel anywhere you look. Personally hope they do approve it but it just ain't looking good. https://t.co/nuBdCDE18L

— Eric Balchunas (@EricBalchunas) March 25, 2024

That downgrade came amid reports that the SEC has launched an investigation into the Ethereum Foundation to establish whether Ether is a security.

Spot Ether ETF filings have also introduced one feature that is different from Bitcoin ETFs. That is staking, which applicants including Franklin Templeton, Ark 21 Shares, and Fidelity have included in their filings.

“Perhaps I will feel differently as we get closer to final approve/deny dates in late May 2024,,” said Salm. “But at this point, I don’t think perceived lack of engagement from regulators should be indicative of one outcome or another.”

He added that investors want and deserve access to Ethereum via a spot Ethereum ETF and that he believes the case is just as strong as it was for spot Bitcoin ETFs.