Ethereum ETF’s Hopes of Approval Dim as SEC’s Crypto Crackdown Dashes.

Feeling nervous about a spot Ethereum ETF? Think again. According to spot bitcoin ETF issuers, the US Securities and Exchange Commission (SEC) is likely to approve an Ethereum exchange-traded fund (ETF) spot soon.

Ever since SEC Chairman Gary Gensler gave the green light to 11 spot Bitcoin ETF applications in January, Ethereum, the world's second-largest cryptocurrency, has been the subject of speculation for spot ETF approval.

Companies that have issued spot bitcoin ETFs, like BlackRock, Fidelity and VanEyck, have been waiting in the wings for an Ethereum product, but now it seems some are testing the waters and not entirely sure of a positive outcome.

Speaking at the Blockchain Week crypto event in Paris this week, VanEck CEO Jan van Eck shared his pessimism about the prospect of Ethereum ETF approval.

“We were the first to file for Ethereum in the US, and we and [Ark Invest CEO] I think Kathy Wood will be the first in line in May to probably get rejected,” Arjun Karpal told CNBC.

The SEC has until the end of May to complete its review of VanEck's Ethereum ETF, with other applications waiting in line until October.

Unlike Bitcoin, which has long been considered a decentralized commodity, the official regulatory stance regarding Ethereum's security is unclear. That made things difficult for ETH investors.

“I don't want to prejudge anyone on the record,” Gensler told Yahoo Finance in March. He was careful not to make any concrete statement on the subject. But the CFTC has said that it will consider Ethereum at different times. A commodity that could speed up the approval process if the SEC recognizes the definition.

Speaking to CNBC, CoinShares CEO Jean-Marie Magnetti shared his doubts about getting SEC approval for a proof-of-stake coin like Ethereum. “I have not seen anything approved this year,” he said.

In a proof-of-concept model, blocks are verified not by miners, but by stakeholders – people who hold large amounts of native tokens (in this case, ETH) that are locked into the network. This fact – which is now key to the functioning of the Ethereum blockchain – resembles a security feature where large shareholders decide how business is run and are rewarded for their investment.

The approval of the Ethereum ETF will increase exposure to the cryptocurrency, allowing new investors to buy and trade the coin indirectly. That also means that potential Ethereum ETF issuers need to have enough ETH to cover a 1:1 trade—which enthusiasts see as bullish because it causes ETH to drop further on-chain.

While some Ethereum futures ETFs have been approved, there is no guarantee that a spot ETF will receive the green light. There was a two-year gap between the approvals of the first Bitcoin futures ETF and the first Bitcoin spot ETF.

The first Ethereum futures ETFs were approved in 2023, so there may be a long way to go before the first spot ETH ETF launches — that is, of course, if history repeats itself.

Edited by Andrew Hayward.