Companies that filed to launch spot Ether (ETH) exchange-traded funds (ETFs) and other firms in the cryptocurrency industry are expecting the U.S. Securities and Exchange Commission (SEC) to reject the offering in May, a new report revealed.
The expectation stems from discouraging outcomes in meetings with the regulator in recent weeks, Reuters reported Thursday, citing people who participated in the discussions but declined to be identified due to the private nature of the matter.
The people said recent discussions with the SEC were largely "one-sided" and staffers of the agency have not communicated substantially regarding the details surrounding the much-anticipated proposed products.
Issuers such as VanEck and ARK Investment Management reportedly argued that the SEC's approval of futures-based ETFs in October, followed by its historic approval of spot Bitcoin ETFs in January, already set a precedent for the green light on ETH ETFs. The applicants, a total of nine so far, also reportedly revealed they have tried to address possible regulatory concerns related to the products. SEC personnel reportedly listened to what the issuers had to say but did not specify their concerns, nor did they ask general questions.
Such a passive attitude during the meetings led issuers and other firms to believe that the SEC would ultimately reject the products next month. The regulator is supposed to decide on VanEck and ARK's applications by May 23 and May 24, respectively.
Bloomberg ETF analyst Eric Balchunas said analysts have been saying the same thing in recent weeks, that the SEC hasn't been engaging with issuers and has provided no comments about the products. "Radio silence = violence," he said.
Before spot Bitcoin ETFs were approved in January, the regulator held proactive meetings with applicants, leading up to the historical approval of the products that led to a three-month bull run for the world's first decentralized digital asset. However, things have been largely different after applicants filed for spot ETH ETFs.
Earlier this week, cross-border banking behemoth Standard Chartered walked back from its earlier prediction that the products would be approved in May. Like Balchunas, analysts at Standard Chartered noted how there has been no constructive dialogue with applying issuers.
Also, the regulator has been delaying making a decision on ETH ETF applications, with the latest being the postponement of a decision on the application of asset management titan BlackRock, which has now been pushed back twice.
The delays in making a decision have thrown a gray cloud over hopes that the regulator will approve spot Ether ETFs in a pattern similar to how spot BTC ETFs were allowed to trade.
