- The SEC has not had extensive discussions with potential issuers of ether ETFs like they did prior to approving bitcoin ETFs, according to analyst James Seyffart who predicts approval of an ether ETF is unlikely in May.
- The SEC has delayed decisions on proposed ether ETFs multiple times already and, given the lack of engagement with issuers, Seyffart expects further delays rather than approvals.
- If an ether ETF is approved this year, Seyffart believes it would likely be a futures-based product first since the SEC may be more comfortable with an ETF based on regulated futures contracts like they were with bitcoin ETFs.
James Seyffart, an analyst at Bloomberg Intelligence, says the U.S. Securities and Exchange Commission really hasn’t engaged with potential issuers of ether exchange-traded funds (ETFs), unlike the extensive talks in the run-up to bitcoin ETF approvals.
Seyffart predicts that a futures-based ether ETF is unlikely to get approved in May. The SEC has delayed decisions on ether ETF proposals multiple times, and Seyffart thinks more delays are likely.
Lack of Engagement With Issuers
The SEC has had extensive discussions with bitcoin ETF issuers over the years before finally approving several bitcoin ETFs in 2021. However, the regulator hasn’t had the same level of engagement with ether ETF issuers.
Seyffart says the SEC has had minimal interaction with firms seeking to launch ether ETFs. The regulator has provided little feedback or guidance. This lack of engagement suggests the SEC still has concerns it wants to discuss.
Additional Delays Expected
The SEC has already pushed back decisions on three proposed ether ETFs:
- VanEck’s application has been delayed twice, with a new deadline of May 6.
- Grayscale’s application has been delayed twice. The new deadline is July 6.
- WisdomTree’s application has been delayed once, with a new deadline of May 20.
Given the lack of engagement from the SEC, Seyffart expects more delays are likely.
He predicts the regulator will extend the application deadlines again rather than approve or reject the proposals. More delays will allow the SEC to continue gathering information and monitoring the market.
Futures-Based ETF More Likely
If the SEC does approve an ether ETF in 2022, Seyffart says it would likely start with a futures-based product.
The regulator may be more comfortable with an ETF based on ether futures contracts trading on the CME market. The SEC highlighted the regulated futures market in its approvals for bitcoin ETFs.
Seyffart says a futures-based ether ETF could potentially get approved in late 2022. However, approval for a fund directly backed by ether remains further off.
Conclusion
The road to an ether ETF is proving just as long and bumpy as it was for bitcoin. Despite growing mainstream adoption of ether, the SEC remains cautious.
Seyffart believes the lack of engagement with issuers means approvals in May are improbable. More likely is another round of delays as the SEC continues its careful approach.
