Is the Ethereum Spot ETF Expected to Be Approved? Industry Experts Are Optimistic About Its Prospects

More than a month after the U.S. Securities and Exchange Commission ( SEC ) historically approved 11 Bitcoin Spot ETFs, the crypto industry currently expects that an Ethereum Spot ETF may receive similar approval as early as May.

According to multiple interviews, the approval prospects for the world's second-largest digital asset Spot product in 2024 are generally optimistic. Not only does the cryptocurrency industry hold an optimistic outlook, but some securities lawyers and traditional Wall Street participants share the same view.

However, there are also those who are skeptical about this. Some point out that the SEC chairman has had a vague stance on the legality of Ethereum, suggesting that it may be an unregistered digital security and therefore unsuitable for an ETF. Another concern is that, compared to Bitcoin, Ethereum has relatively weak foundational and institutional support in the financial industry.

Despite these concerns, several securities lawyers have stated that the approval process for Bitcoin Spot ETFs provides a blueprint for the approval of Ethereum ETFs. A former SEC enforcement lawyer believes that when the same factors from the Bitcoin Spot ETF approval apply here as well, the SEC will find it difficult to present new reasons to deny the Ethereum Spot ETF.

Due to the victory of the cryptocurrency asset management company Grayscale in its court appeal, nearly ten Spot Bitcoin ETFs were approved on January 10th. This unprecedented event sets a precedent for the approval of other digital asset ETFs.

The Washington D.C. Court of Appeals supports Grayscale's view, stating that the SEC acted "arbitrary and capricious" in rejecting its application to convert its Bitcoin trust fund into a Spot ETF. The court questioned the SEC's claim regarding the essential differences between Spot ETFs and futures ETFs.

Grayscale's victory is seen as an important milestone for the cryptocurrency industry and has paved the way for other issuers to launch Bitcoin Spot products. The SEC subsequently began communicating with several issuers on how to offer Bitcoin within the traditional ETF framework.

SEC commissioner Hester Peirce publicly stated that the committee should not wait for the court to force it to approve products demanded by investors.

The increasing demand from Wall Street giants for Ethereum Spot ETFs is another reason for optimism regarding its approval. Several institutions, including large asset management companies, have applied to launch Ethereum Spot ETFs, managing a total of assets worth trillions of dollars.

Industry insiders point out that Ethereum, as a unique product, has attracted the attention of many Wall Street firms and fintech companies due to the applications built on its blockchain. The existence of the Ethereum futures market is also considered another reason that the SEC finds it difficult to reject a Spot ETF.

However, there are also viewpoints that believe it may be overly optimistic to approve an Ethereum Spot ETF in 2024. The SEC chairman's ambiguous stance on whether Ethereum is a security is seen as a potential risk. The transition of Ethereum to a PoS mechanism in 2022 has further exacerbated this uncertainty.

Some analysts predict that the SEC will eventually approve the Ethereum Spot ETF, but it may have to wait until after the November elections. They believe that the current political factors may influence the SEC's decision-making process.

Overall, although the prospects for Ethereum Spot ETF are generally optimistic, there is still uncertainty regarding its approval timeline and specific details. The industry will continue to closely monitor the SEC's actions and related regulatory developments.