Market maker GSR has reduced the likelihood of approval for spot exchange-traded funds based on Ethereum in May to 20%, according to The Block.
“We now believe the probability of the SEC approving spot ETH-ETFs in May is 20%,” stated company analyst Brian Rudick.
In January, GSR’s estimate reached 75%. This optimistic outlook was explained by the expert as a result of Grayscale’s victory in the appellate court and the launch of futures funds based on the second-largest cryptocurrency by market capitalization.
However, the GSR analyst has now adopted a more conservative stance:
“The SEC, which is also experiencing at least some political pressure aimed at limiting the launch of new crypto-ETFs, has been minimally involved [in the product discussion]. The supposed investigation into whether Ethereum is a security significantly reduces the chances of approval.”
Earlier, U.S. senators urged the Commission not to approve additional cryptocurrency exchange-traded funds, citing the “enormous risks” of these instruments.
Discussing the internal workings of the SEC, the GSR analyst added that the regulator might be trying to avoid turning a potential fund approval into another “mass spectacle.”
Rudick believes that any process for approving spot Ethereum-ETFs could now take much longer. He predicted the product’s launch in 2025-2026.
The expert noted the inclusion of staking features in fund applications.
“While there is competitive dynamics, as an ETF with yield is likely more attractive than without, it’s hard to understand why issuers are significantly complicating approval when it already seems unlikely,” he added.
By including staking programs, future fund issuers might be trying to attract the SEC’s attention, GSR suggested.
Bloomberg exchange analyst Eric Balchunas also reduced the likelihood of Ethereum fund approval in May to 25%.
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
“The lack of engagement [by the regulator] seems purposeful rather than procrastination. No positive signs/intel anywhere you look. Personally, I hope for approval, but it doesn’t look very good,” the expert emphasized.
Previously, the SEC postponed the deadline for considering the Ethereum Futures Trust ETF application from Grayscale Investments to May 30, 2024.
In early March, the management firm and Coinbase discussed with the regulator the conversion of ETHE into a spot Ethereum-ETF. The race to launch the instrument also includes Franklin Templeton, VanEck, BlackRock, Fidelity, and Invesco with Galaxy.