Ethereum ETFs May Face Rejection! Approval Unlikely in May

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While we eagerly speculated on Ethereum ETF, the Securities and Exchange Commission announced an extension of its decision timeline regarding approving the Hashdex Nasdaq Ethereum exchange-traded funds.

Analysts believe that if the ETFs, including spot ether and futures contracts, are approved, it could heavily impact the market, marking a significant development in the crypto investment landscape.

SEC’s Notice and Timeline Extension

In a notice filed on Tuesday, 19th March, the SEC disclosed its decision to prolong the timeframe for determining the Hashdex ETF to May 30, 2024. According to the SEC, this extension is necessary “so that it has sufficient time to consider the proposed rule change and the issues raised therein.”

The SEC mentioned in its notice the proposed rule change for the Hashdex Nasdaq Ethereum ETF, initially filed in September 2023. Since then, the regulatory process has undergone several stages, including the Commission having the authority to designate a longer period for consideration and the institution of proceedings to determine approval or disapproval.

Market Sentiment and Analyst Perspectives

Although analysts are optimistic about the approval, the overall sentiment echoes the opinion that Ethereum ETFs will likely get delayed like Bitcoin ETFs. Bloomberg ETF analysts Eric Balchunas and James Seyffart have also expressed the same feeling.

James Seyffart wrote on Tuesday, “These were always going to be delay orders. The only deadline that matters is May 23rd.” Compared to his previous statements when James sounded highly eager and optimistic, this time, Seyffart expressed a shift in his outlook, saying, “My cautiously optimistic attitude for ETH ETFs has changed from recent months.” 

Eric Balchunas acknowledged a decrease in the likelihood of spot Ethereum ETFs. He says, “Yeah our odds of eth ETF approval by May deadline are down to 35%.” He further added, “Note: 35% isn’t 0%, still poss, and and long-term we think it will happen.”

Grayscale’s Proposal and Stakeholder Vote

Grayscale has not given up after facing heavy outflows in the GBTC!

Grayscale revealed its plans to incorporate staking into its spot Ether ETF application. The proposal, outlined in a consent solicitation statement, aims to allow the Grayscale Ethereum Trust to engage in proof-of-stake validation protocols using Ethereum held by the trust.

However, the proposal has yet to become successful, subject to a vote among stakeholders, with approval requiring consent from over 50% of shares. If the proposal gets majority approval, Grayscale will join other issuers, including ARK 21Shares and Fidelity, in integrating staking into their spot ETF applications.

Ethereum ETFs are still in uncertainty. The SEC has extended its decision timeline for the Hashdex Nasdaq Ethereum ETF and market sentiment fluctuating, uncertainty looms over the approval prospects for spot Ethereum ETFs.