Ethereum
Here’s why the Ethereum ETF could be rejected
According to James Seyffart, a leading ETF analyst, this is more and more likely that the U.S. Securities and Exchange Commission will deny a large number of Ethereum ETF applications in May by asserting that the underlying cryptocurrency is a security.
“It doesn’t guarantee that they will, but I think it almost guarantees that the SEC is at least considering it,” Seyffart added.
This came after financial lawyer Scott Johnsson estimated that the legal status of Ethereum would likely appear in the agency’s next ETF order.
According to Johnson, the SEC is supposed to provide “notification of the grounds for disapproval considered.”
The SEC says it was inappropriate to offer shares of commodity-based trusts because the underlying asset is a security.
It should be noted that this is not an issue that Bitcoin ETFs have faced.
After months of discussions, the SEC is expected to make its final decision on VanEck and ARK’s Ethereum ETF filings on May 23 and 24, respectively.
The industry consensus appears to be that these applications will be rejected by the SEC due to lack of engagement with issuers. However, it is unclear what the exact reason for this rejection will be. According to Matt Hougan of Bitwise, Ethereum ETF products will be rejected due to insufficient data.
Besides VanEck and Ark Invest, several other big players, including BlackRock and Fidelity, are vying to launch a spot Ethereum ETF.
As reported by U.Today, Grayscale, which won a major legal victory against the SEC last year, recently withdrew its “Trojan horse” Ethereum futures deposit. This indicates that she does not intend to pursue further legal action against the agency.
The SEC has faced a lawsuit from Ethereum backer ConsenSys over its attempts to label the leading altcoin as a security. However, BlackRock’s Larry Fink recently stated that such a designation would not necessarily prevent them from launching an Ether ETF.