The past 24 hours have seen Ethereum (ETH), the second-largest cryptocurrency by market capitalization, undergo a significant 5% price drop. This drop has been linked to the growing speculation surrounding the potential rejection of highly anticipated Ethereum ETFs by the US Securities and Exchange Commission (SEC) in the upcoming May deadline. According to a recent Reuters report, various US Bitcoin ETF issuers and firms are bracing themselves for the denial of their applications to launch ETFs tied to the price of Ethereum.
The expectations of the ETF rejection have been fueled by “discouraging meetings” between the applicants and the regulatory agency in recent weeks. Prominent investment firms such as VanEck, ARK Investment Management, and seven other issuers have submitted filings to list ETFs tracking the spot price of Ethereum. VanEck and ARK’s applications are subject to the SEC’s decisions by May 23 and May 24, respectively. The discussions between the ETF issuers and the SEC have reportedly been one-sided, with the agency staff not engaging in substantive details about the proposed products.
During the meetings, the issuers argued that the approval of spot Bitcoin ETFs and Ethereum futures-based ETFs in October should set a precedent for the spot ETH products. Despite their efforts to address potential regulatory concerns, the SEC staff did not clarify specific issues or engage in meaningful dialogue, hinting at a possible denial of the ETF requests. This uncertainty has left the regulatory landscape unclear and may lead to delays in approval or rejection until later in 2024 or beyond.
Industry insiders speculate that rejecting Ethereum ETFs could result in legal action, potentially involving the courts before these products become a reality. The anticipated rejection has already influenced the price of Ethereum, with market participants factoring in the likelihood of a negative outcome. ETH is currently trading at $3,100, showcasing a persistent downtrend over broader time frames. Over the past fourteen and thirty days, the token has experienced significant declines of 12% and 14%, respectively.
The uncertain future of Ethereum ETFs presents a setback for the cryptocurrency industry. The potential rejection by the SEC could have far-reaching implications on the market, leading to legal challenges and price volatility for Ethereum. As the regulatory landscape remains uncertain, market participants are advised to conduct their own research and make informed investment decisions to navigate the evolving cryptocurrency market.
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