The SEC and Ether ETFs: Potential Setback for Crypto Industry

By Suzanne McGee and Hannah Lang

The Securities and Exchange Commission (SEC) is expected to deny applications from U.S. issuers and other firms looking to launch exchange-traded funds (ETFs) tied to the price of ether, the world’s second-largest cryptocurrency. Despite recent discouraging meetings with the agency, issuers such as VanEck and ARK Investment Management remain hopeful. However, the one-sided discussions have left many industry insiders concerned about the future of these proposed products.

A setback could be on the horizon for the crypto industry, which had high hopes that the approval of spot bitcoin ETFs would pave the way for similar products tied to other cryptocurrencies. Regulatory uncertainties, led by SEC chief Gary Gensler, are casting a shadow over the approval process. However, some issuers are still planning to submit additional paperwork to the SEC to keep the conversation alive.

Todd Rosenbluth, head of ETF analysis at data firm VettaFi, believes that approval for ether ETFs may be delayed until later in 2024, or even longer. The lack of specific feedback from the SEC during recent meetings has fueled speculation that the applications may ultimately be denied.

As expectations for a rejection grow, the price of ether has faced downward pressure. While the cryptocurrency has seen a 39% increase this year, it lags behind bitcoin, which has surged over 51% and reached new all-time highs. Industry experts believe that more data is needed to satisfy the SEC’s concerns regarding the underlying ether market.

Despite the challenges, some remain hopeful that ether ETFs will eventually be approved, possibly through legal challenges. The road to regulatory approval is long and complex, but many in the industry are determined to push forward in bringing cryptocurrencies into the mainstream.