One of the top ETF experts, James Seyffart, believes that the US Securities and Exchange Commission will probably reject a lot of applications for Ethereum ETFs in May on the grounds that the underlying cryptocurrency is a security.
Seyffart continued, “I think this almost guarantees that the SEC is at least considering it, not that they will do this.”
This happened after financial attorney Scott Johnsson predicted that the agency’s next ETF ruling will address Ethereum’s legal standing.
Johnson states that a “notice of the grounds for disapproval under consideration” must be provided by the SEC.
The SEC argues that because the underlying asset is a security, it was illegal to issue shares in commodity-based trusts.
Interestingly, Bitcoin ETFs were not affected by this.
The SEC is expected to make a final determination about VanEck and ARK’s Ethereum ETF filings on May 23 and 24, respectively, following months of kicking the can down the road.
The general perception in the industry seems to be that the SEC will reject these applications since they don’t interact with issuers. It’s still unclear, though, exactly why this rejection will occur. Bitwise’s Matt Hougan said that products that use Ethereum ETFs will be turned down since there is not enough information.
In addition to VanEck and Ark Invest, a number of other major firms, like as Fidelity and BlackRock, are competing to introduce an Ethereum ETF.
According to U.Today, Grayscale, which defeated the SEC in court last year, has withdrawn their Ethereum futures application that was dubbed a “Trojan horse.” It is clear from this that it has no intention of suing the agency again.
ConsenSys, a supporter of Ethereum, has sued the SEC for attempting to classify the most popular altcoin as a security. Larry Fink of BlackRock, however, recently said that they wouldn’t be prevented from creating an Ether ETF by such a classification.
