Over the past 24 hours, Ethereum (ETH), the second-largest cryptocurrency by market cap, has seen a significant 5% rise. prices drop. The decline comes amid growing speculation that the highly anticipated ETFs are likely to be rejected by the US Securities and Exchange Commission (SEC) at the upcoming May deadline.
US Bitcoin ETF issuers brace for expected rejection from the SEC
According to According to a recent Reuters report, several U.S. Bitcoin ETF issuers and companies expect their applications to launch ETFs linked to the price of ETH to be rejected by the SEC.
These expectations have been fueled by “discouraging meetings” between applicants and the regulatory agency in recent weeks, four individuals familiar with the matter revealed.
Prominent investment firms such as VanEck, ARK Investment Management, and seven other issuers have filed documents with the Securities and Exchange Commission to list ETFs that would track the spot price of Ethereum.
As first in line, VanEck and ARK's applications are subject to SEC decisions by May 23 and May 24, respectively.
Sources participating in the meetings between Bitcoin ETF Issuers and the SEC reported that the discussions were primarily “one-sided,” with agency staff not engaging in substantive details about the proposed products.
This is in stark contrast to the extensive and detailed discussions between issuers and the agency prior to the SEC's historic approval of Bitcoin exchange-traded funds in January.
Issuers argued during the meetings that the approval of bitcoin spot ETFs and Ethereum futures-based ETFs by the SEC in October sets a precedent for the spot price. Ethereum Products. They also made efforts to address potential regulatory concerns.
Despite their arguments, the report notes that SEC staff did not articulate specific concerns or engage in meaningful dialogue, which also suggests the applications may be denied.
A setback for the crypto industry
If these predictions come true, it will be a setback for the cryptocurrency industry, which had hoped the approval of spot bitcoin ETFs would pave the way for similar products and contribute to the trend. adoption Of cryptocurrencies.
According to Todd Rosenbluth, head of ETF analysis at data firm VettaFi, a potential delay in approval or rejection until later in 2024 or later has left the regulatory landscape uncertain.
While some issuers have expressed their intention to file additional disclosure papers to continue the conversation with the SEC, the general sentiment is that there is a growing belief that the requests will unacceptable.
Jan Van Eck, CEO of VanEck, has already stated that the company's application will likely be rejected, while ARK Investment Management has yet to comment.
Rejected Ethereum ETFs could spark potential court battles
Many applicants expect the SEC to cite broader issues, such as the nature and depth of statistical data about the underlying ETH market, as reasons for their decision if the ETF is rejected.
Matt Hogan, chief investment officer at Bitwise Asset Management, which has applied for a spot in the Ethereum ETF, believes the SEC may need more time to monitor. Ethereum futures contracts And collect additional data.
Industry insiders also speculate that the rejection of Ethereum ETFs could lead to legal action, with one source suggesting that the courts may intervene before Ethereum ETFs eventually become a reality.
The expected rejection has already weighed on Ethereum's price, with Hong Fang, head of cryptocurrency exchange OKX, stating that the cryptocurrency is facing downward pressure as market participants take into account the possibility of a negative outcome.
Currently, ETH is trading at $3,100, further highlighting the cryptocurrency's ongoing downtrend on broader time frames. Over the past 14 and 30 days, the coin has seen a significant decline of 12% and 14% respectively.
Featured image from Shutterstock, chart from TradingView.com
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