Is Optimism Over Spot Ethereum ETF Approvals Waning?

Since spot Bitcoin ETFs were approved in mid-January, crypto markets have surged a further 60% adding a trillion dollars to total capitalization.

Bitcoin charted a new all-time high, but Ethereum did not and has been unable to overcome the $4,000 level decisively.

On March 11, Fox Business correspondent Eleanor Terrett said optimism about the U.S. Securities and Exchange Commission approving spot Ethereum ETFs by May 23rd is waning.

ETH ETF Fever Fading

She added that based on conversations with “people familiar with the matter,” meetings in recent weeks have been very much one-sided.

Issuers and custodians have been trying to rally SEC staff to get the process rolling, but they were “not really engaging in meaningful ways like they did with the BTC spot ETF applications,” she said.

“I’m told that Gary Gensler believes he already placated the industry with the approval of the spot BTC ETFs.”

Additionally, anti-crypto politicians like Elizabeth Warren are already angry at the agency for approving the Bitcoin ETFs in the first place and are “rallying against the same thing happening for ETH.”

A source told her that:

“Staff has been very hard to gauge on this and we’re not sure if anyone really knows what’s going on in their heads. But they’re going to have to start work soon if it’s going to have a shot.”

🚨SCOOP: Optimism about the @SECGov approving the $ETH spot ETFs by May 23rd is waning.

Based on my conversations with people familiar, meetings in recent weeks have been very much one sided, with issuers and custodians trying to rally SEC staff to get the process rolling, but…

— Eleanor Terrett (@EleanorTerrett) March 10, 2024

ETF Store President Nate Geraci commented that the SEC has argued that Ethereum futures are not highly correlated with spot markets.

“Not saying SEC gonna approve spot ether ETFs, but not sure how they deny based on lack of correlation. Would be pretty bad look IMO.”

He added that the Grayscale court victory would be a compelling reason for approval and options for the SEC are to “unwind years of implicit acceptance of Ether as a commodity or face new lawsuit(s) if issuers so choose.”

“Maybe I’m missing something, but this all seems so basic,” he said before adding that if the SEC is comfortable with investors owning ETH futures ETFs, then they should be ok with spot Ethereum ETFs.

Warren on The Warpath

Bloomberg ETF analyst Eric Balchunas offered his opinion, stating:

“Gary (Gensler) is in the (Elizabeth) Warren doghouse for BTC. It may be that simple. And threat of lawsuit lower IMO because Grayscale may be less excited to subsidize another blockbuster hit product for BlackRock.”

If ether futures aren’t *highly* correlated w/ spot market, then why did SEC approve ether futures ETFs in Oct…

How does that protect investors?

Not saying SEC gonna approve spot ether ETFs, but not sure how they deny based on lack of correlation. Would be pretty bad look IMO.

— Nate Geraci (@NateGeraci) March 10, 2024