The U.S. Securities and Exchange Commission (SEC) has once again postponed its decision on the approval of spot Ether ETFs, casting a shadow over the prospects of such funds hitting the market anytime soon. The delayed decision, announced on March 19, applies to ETF proposals from Hashdex and ARK 21Shares, pushing the final verdict to late May, with specific deadlines set for May 24 for ARK 21Shares and May 30 for Hashdex.
This development occurs amidst a backdrop of increasingly negative sentiment from analysts regarding the approval of the eight Ether ETF proposals currently on the table from major firms including BlackRock, Grayscale, Fidelity, and others. James Seyffart, a Bloomberg ETF analyst, expressed a shift from cautious optimism to a belief that these applications would likely be denied, citing a lack of communication between the SEC and the issuers.
Analysts Lower Approval Odds
The outlook for Ether ETF approvals has worsened, with another Bloomberg ETF analyst, Eric Balchunas, reducing the probability from 50% to 35%. The comparison of the Ether ETF approval process to the previously observed Bitcoin ETF race highlights a significant change in the SEC’s engagement, moving from active discussions to what Balchunas describes as “radio silence.”
Market Sentiment Wanes
Public sentiment on the approval of Ether ETFs by May’s end has also declined, with odds on the decentralized betting platform Polymarket dropping to 32% from a January high of 77%. This shift reflects broader market skepticism about the SEC’s willingness to approve these ETFs, despite the substantial amount of money wagered on their outcome.
Grayscale Considers Adding ETH Staking
In an interesting twist, Grayscale is exploring the addition of staking to its spot Ether ETF application. The firm proposed allowing the Ethereum held by its Grayscale Ethereum Trust to participate in proof-of-stake validation, a move aimed at mitigating inflationary pressures and maintaining competitive parity with similar investment products offering staking.
These proposals are pending shareholder approval, requiring more than 50% of votes in favor. If successful, Grayscale could join other firms like ARK 21Shares, Franklin Templeton, and Fidelity in integrating Ether staking into their ETF applications, adding a new dimension to the ongoing debate and development of cryptocurrency ETFs in the U.S. market.
