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Belief in near-term spot Ethereum ETF approval is fading in the face of mounting skepticism. Justin Sun, the founder of TRON Foundation, has expressed doubts regarding the potential approval of a spot Ethereum exchange-traded fund (ETF) in the upcoming month.
“My honest opinion (NFA) is that an Ethereum ETF won’t be approved in May. The crypto industry still needs to prepare for long-term education with regulators, focusing on helping them understand crypto. But we’ve always been here, haven’t we?” Sun stated in a recent post on X.
His comments reflect a broader sentiment within the industry that regulators are yet to fully grasp the fundamentals of crypto.
The crypto industry has long actively engaged with regulators, but progress feels stagnant. Sun is not the only person frustrated by the slow progress of crypto regulation.
“Where I think you have less successful regulatory regimes is when you try to analyze crypto through the lens of traditional finance. You say, ‘Well, is it a bit like a security? Is it a commodity?’… No, it’s kind of none of those things. It’s crypto,” Oliver Linch, CEO of Bittrex Global, said in an interview with CNBC.
Skepticism is rising, particularly after people involved in meetings between the SEC and issuers told Reuters that the possibility is slim. Major institutions like JPMorgan and Bernstein also share this doubt about the SEC’s alleged lack of interaction.
However, there are still glimmers of optimism. The involvement of BlackRock, known for its high success rate (576 ETF approvals with only one rejection), raises hopes for the potential approval.
Grayscale’s perspective also offers some counterpoints. Craig Salm, Grayscale’s Chief Legal Officer, believes the SEC’s lack of engagement with applicants isn’t a dealbreaker. He pointed out that the SEC engaged with issuers during the approval process for spot Bitcoin ETFs, and those solutions could also apply to Ethereum.
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
The SEC’s decisions on the filings by VanEck and ARK are expected on May 23 and May 24. With the prevailing pessimistic view, an approval would come as a pleasant surprise, while a delay or rejection potentially impacts the market in the short term.
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