Market Data 
VanEck is bracing for a potential rejection.
When the SEC is silent, the ETF market checks its pulse.
Several applications for spot Ethereum ETFs are pending SEC approval. As the decision date approaches, uncertainty grows, with financial and crypto leaders expressing a mix of skepticism and hope.
A recent report from Barron’s suggests an ongoing, frustrating situation for exchange-trade fund (ETF) issuers.
According to Barron’s, unlike the open dialogue that paved the way for spot Bitcoin ETFs, the conversation between the issuers and the SEC around Ethereum ETFs seems more one-sided. This lack of engagement foreshadows a rocky road for Ethereum ETFs.
“Some ETF issuers have met with the SEC to talk about their products, but so far, those discussions have largely been one-sided, without the agency giving the companies the critical feedback needed to finalize their products, according to people familiar with the matter,” wrote Barron’s. “At this point in the Bitcoin ETF process, the issuers were already engaged in a robust back-and-forth with agency staff.”
While Barron’s is skeptical, JPMorgan believes the question is “when” rather than “if.”
Analyst Nikolaos Panigirtzoglou told The Block that a spot Ethereum ETF approval might still occur, but it would take longer than expected.
According to him, ETF companies may initiate legal lawsuits against the agency if the SEC doesn’t approve these filings. “If there is no spot Ethereum ETF approval in May, then we assume there is going to be a litigation process after May,” said Panigirtzoglou.
Panigirtzoglou suggested that the lawsuit will likely end up in opposition to the SEC, and just like what has happened with Grayscale, the SEC would eventually be “forced” to approve spot Ethereum ETFs.
VanEck, one of the spot Ethereum fund issuers, projects an outright rejection of the ETF filings. VanEck CEO Jan van Eck said in an interview with CNBC that the applications of VanEck and Ark Invest “are kind of the first in line for May…to probably be rejected.”
“The way the legal process goes is the regulators will give you comments on your application, and that happened for weeks and weeks before the bitcoin ETFs — and right now, pins are dropping as far as Ethereum is concerned,” said van Eck.
“575 to one”
For many fund managers, the SEC’s silence is a nerve-wracking waiting game. BlackRock, however, might be more accustomed to this process.
BlackRock has a history of 575 ETF approvals with only 1 rejection. This high success rate creates a positive outlook for the asset manager’s spot Ethereum ETF application.
Recently, Ethereum has drawn attention after news that the Ethereum Foundation is under investigation by an “unstated authority” surfaced. Speculations suggest that this scrutiny, possibly from the SEC, aims to classify Ethereum’s native token, ETH, as a security.
Despite these speculations, BlackRock CEO Larry Fink said that a spot Ethereum ETF could still be possible even if ETH is classified as a security.
Jake Chervinsky, chief legal officer at Variant Fund, suggested BlackRock’s possible application for withdrawal. He noted BlackRock’s history of successful ETF approvals is attributed to a collaborative approach with the SEC, not just forceful tactics.
“If the SEC asks Blackrock and the other ETH ETF sponsors to withdraw (a common practice), I bet they will,” commented Chervinsky.
