A senior Bloomberg analyst specializing in exchange-traded funds (ETFs), Eric Balchunas, has indicated that the approval of spot ethereum ETFs in the United States appears unlikely for the current year. Despite the Securities and Exchange Commission (SEC) recently approving spot bitcoin ETFs, Ethereum may not see the same fate due to different regulatory challenges and an ongoing investigation into whether ETH should be classified as a security.
Regulatory Hurdles for Ethereum
In an interview with DL News, Balchunas highlighted several factors complicating the approval process for ethereum ETFs. The SEC’s ongoing scrutiny of Ethereum, including an investigation into the Ethereum Foundation and the unclear status of ETH as a security, poses significant obstacles. This uncertainty is exacerbated by SEC Chair Gary Gensler’s reluctance to clearly state whether Ethereum is considered a security, despite inquiries from lawmakers.
Legal Challenges and Industry Reluctance
The path to approval for ethereum ETFs is further complicated by the industry’s hesitance to engage in legal battles with the SEC. Balchunas pointed out that unlike Grayscale, which challenged the SEC over bitcoin ETF rejections, other firms are less inclined to sue the regulator due to broader business considerations and a desire to maintain a good relationship with the agency.
Also Read: Ethereum ETF Proposal Revised by ARK Invest and 21Shares
Election Year Implications
The forthcoming U.S. election could also play a crucial role in the future of cryptocurrency regulations. Balchunas noted that a potential leadership change at the SEC following the election, especially if Donald Trump were to win, could lead to a more crypto-friendly SEC chair. Such a change might favor the approval of spot ethereum ETFs, albeit possibly not until around December 2025, considering the timelines for new filings and regulatory decisions post-election.
Market and Political Dynamics
While Trump has garnered some support from the crypto community, Balchunas cautioned that Trump’s administration is not necessarily pro-crypto, referencing the tenure of former SEC Chair Jay Clayton, who did not approve a bitcoin ETF. The analyst suggested that while a second Trump administration might be more favorable to crypto than the current regime, significant regulatory shifts should not be expected immediately.
