Analysts Convinced Ethereum ETF Verdict Is Virtually Decided

• The SEC’s deadline for an Ethereum ETF decision is edging closer.
• Ethereum ETF analysts are once again weighing in on the potential verdict.
• Optimism is waning regarding the SEC’s verdict.

In recent weeks, once-peaking expectations for an Ethereum ETF approval have diminished as optimism among analysts has waned amid inconsistencies in the actions of the U.S. Securities and Exchange Commission (SEC). With only three days remaining until the commission’s deadline for a verdict, all eyes are on the SEC’s potential decision.

Ethereum ETF Approval in Limbo?

Taking a stance on the likely decision by the SEC on the proposals in review, ETF expert James Seyffart asserted in a May 18 tweet that approval is unlikely.

“It’s just not happening guys. Sorry,” he stated. Seyfarrt’s comment reinforces the pessimism regarding the SEC’s approach to its ongoing review and the reported lack of engagement with issuers on the proposed investment vehicle.

When asked by ETF Store President Nate Geraci for the reasoning behind his skepticism, the ETF analyst opined that the commission is likely to provide an objective-sounding reason to delay the decision, potentially citing weak historical correlations between ETH futures and spot prices.

Seyffart added that despite the approval of ETH futures ETFs last October, the spot counterpart may still be rejected, possibly justified by claims that the futures market has not provided sufficient historical data to prevent fraud and manipulation in the spot market.

However, Geraci believes there is a technical possibility that the SEC could approve the 19b-4s first and then delay the approval of the S-1s. Despite the debate, the entire class of Ethereum ETFs is facing a roadblock.

Ethereum Categorization Threatens ETFs

A March filing by asset management firm BlackRock, also awaiting an Ethereum ETF verdict, has raised doubts about the prospects of success for the proposed investment vehicle, sparking debate over whether Ether can be classified as qualifying for a commodity-based ETF structure.

According to analysts, the filing suggests that the SEC might deny the eight applications it faces, citing that they are improperly filed as commodity-based trusts holding a security.

“The obvious purpose is to potentially deny on the basis that these spot filings are improperly filed as commodity-based trust shares and do not qualify if they are holding a security,” stated Johnsson.

Despite the prevailing sentiment, other market watchers emphasize that an Ethereum ETF approval is still likely, even if not immediately.

On the Flipside

• VanECK, the first issuer in line for verdict by May 23, is expecting a rejection by May 23.
• BlackRock CEO Larry Fink has emphasized that an Ether ETF is still likely despite the SEC’s security probe.
• At press time, Ethereum is trading at $3,103.

Why This Matters 

The likelihood of a positive decision on Ether ETFs currently appears slim, and a rejection would have significant implications for the asset’s status and the broader industry. However, despite the waning optimism, the SEC’s unpredictable nature makes predicting a definitive rejection of the proposals challenging.

Read more about the SEC’s efforts to reclassify Ethereum as a security:
How Year-Long ETH Security Probe Paints SEC into a Corner

Discover more about the exit of the notorious wallet drainer from the industry:
Crypto Industry Relieved as Wallet Drainer Bites the Dust