Ethereum ETF Approval Hopes Dim as Regulatory Hurdles & Security Classification Concerns Loom

By: Isha Das

Blockchain founder Justin Sun suggests the U.S. Securities and Exchange Commission (SEC) is unlikely to approve an Ethereum exchange-traded fund (ETF) in May. Sun's perspective aligns with several market analysts who anticipate the SEC will reject the pending Ethereum ETF applications. Notably, predictions suggest a mere 25% chance of a spot Ethereum ETF approval by May.

The less active involvement of the SEC in the application process as compared to the Bitcoin ETF phase has contributed to this skepticism. Furthermore, the SEC is reportedly investigating the classification of ETH as security, triggering a lawsuit from ConsenSys against the Commission. This development, coupled with a pessimistic outlook from recent meetings with the SEC, significantly lowers the forecasted likelihood of an Ethereum ETF approval.

An unredacted lawsuit from ConsenSys reveals that the SEC secretly considered ETH as a security since last April. Despite these factors, ETF issuers like BlackRock and Grayscale persistently update their applications, suggesting some optimism. Plus, the Chief Legal Officer at Grayscale, Craig Salm remains hopeful, believing that the SEC’s aloofness with spot Ethereum ETF applicants will not decisively obstruct their approval or the product's prospects. He emphasizes that investors want access to Ethereum in the form of a spot Ethereum ETF, just like they had for Bitcoin ETF.