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Ether ETFs Likely Won’t Get Approved in May, Bloomberg Analyst Predicts

March 21, 2024 | by stockcoin.net

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According to Bloomberg analyst James Seyffart, the likelihood of spot ether exchange-traded funds (ETFs) receiving approval in May has decreased. Seyffart and his colleague, Eric Balchunas, previously estimated a 35% chance of approval, but now predict that the ETFs will be denied on May 23rd. Seyffart attributes this prediction to the Securities and Exchange Commission’s (SEC) apparent lack of engagement with potential issuers, highlighting the contrast with the extensive discussions that occurred before spot bitcoin ETFs were approved earlier this year. Currently, seven issuers are hoping to launch an ether fund, including BlackRock, Fidelity, and Grayscale.

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Ether ETFs Likely Won’t Get Approved in May, Bloomberg Analyst Predicts

Background Information

Ether ETFs have been a hot topic of discussion in the cryptocurrency industry. These exchange-traded funds seek to provide investors with exposure to the price movements of Ether, the native cryptocurrency of the Ethereum blockchain. However, obtaining approval from regulators, particularly the U.S. Securities and Exchange Commission (SEC), has proven to be a challenge. Bloomberg analyst James Seyffart has recently made a prediction regarding the approval of Ether ETFs in May.

Overview of the current state of Ether ETFs

Currently, there are several issuers vying for approval to launch Ether ETFs, including BlackRock, Fidelity, Invesco with Galaxy, Grayscale, VanEck, 21Shares with Ark, and Hashdex. These issuers are seeking to create investment products that would track the price of Ether and allow investors to gain exposure to the cryptocurrency without having to directly own and store it.

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Bloomberg analyst prediction

According to James Seyffart, an ETF analyst at Bloomberg Intelligence, the odds of spot Ether ETFs getting approved in May have diminished. Previously, Seyffart and his colleague had estimated a 35% chance of approval for one or more of the issuers. However, their revised prediction indicates that the ETFs will likely be denied on May 23rd, which is the final deadline for the SEC to make a decision on one of the applicants.

Previous odds of approval

The prediction of a diminished chance for approval represents a significant change from the previous estimation of a 35% likelihood. The initial odds took into account the potential engagement between the SEC and the issuers. However, it appears that the SEC has not engaged extensively with potential issuers of spot Ether ETFs, unlike the discussions that occurred before spot bitcoin ETFs were approved in January.

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Reasons for the revised prediction

The lack of engagement between the SEC and potential Ether ETF issuers could be a significant factor contributing to the revised prediction. The extensive discussions that took place before the approval of spot bitcoin ETFs in January may have set a precedent for the level of engagement expected from the SEC. Without such interactions, it becomes less likely that the Ether ETFs will receive approval.

Contrast in SEC engagement with issuers

The contrast in the SEC’s engagement with issuers between spot bitcoin ETFs and spot Ether ETFs is notable. While discussions between the SEC and issuers of spot bitcoin ETFs were extensive and likely contributed to their eventual approval, it appears that similar discussions have not taken place for spot Ether ETFs. This difference in regulatory engagement could explain the differing outcomes for the two types of ETFs.

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Approval of spot bitcoin ETFs in January

In January, the SEC approved spot bitcoin ETFs, marking a significant milestone for the cryptocurrency industry. The approval allowed investors to gain exposure to bitcoin through regulated investment products, leading to increased mainstream adoption and interest. The approval of spot bitcoin ETFs was a result of extensive discussions and engagements between the SEC and potential issuers.

List of seven issuers

There are currently seven issuers seeking approval for spot Ether ETFs: BlackRock, Fidelity, Invesco with Galaxy, Grayscale, VanEck, 21Shares with Ark, and Hashdex. Each issuer brings its own unique approach and expertise to the table, aiming to provide investors with access to the Ether market through ETFs.

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Description of each issuer

  • BlackRock: One of the largest asset management firms in the world, BlackRock has shown interest in entering the cryptocurrency space and providing investors with regulated exposure to Ether.
  • Fidelity: Known for its robust investment platform and services, Fidelity has been exploring various cryptocurrency-related offerings, including Ether ETFs.
  • Invesco with Galaxy: Invesco, a global investment management firm, has partnered with Galaxy Digital, a cryptocurrency-focused financial services firm, to launch an Ether ETF.
  • Grayscale: As a leader in cryptocurrency investment products, Grayscale has filed for an Ether ETF as part of its ongoing commitment to providing institutional-grade exposure to digital assets.
  • VanEck: VanEck, a pioneer in ETFs, has extensive experience in navigating the regulatory landscape. The company’s entry into the Ether ETF space signals confidence in the potential of the cryptocurrency.
  • 21Shares with Ark: 21Shares, a European issuer of crypto ETPs, has joined forces with Ark Invest, an investment firm led by prominent investor Cathie Wood, to offer an Ether ETF.
  • Hashdex: Hailing from Brazil, Hashdex specializes in digital asset management and has ambitious plans to introduce a regulated Ether ETF.

Final deadline for decision

The SEC has set a final deadline of May 23rd for making a decision on the spot Ether ETFs. This deadline provides a clear timeline for potential issuers and investors to anticipate when a decision may be reached. As the date approaches, market participants will be closely monitoring any developments and announcements from the SEC.

Implications of SEC’s decision

The decision by the SEC regarding the approval or denial of spot Ether ETFs carries significant implications for the cryptocurrency market. Approval could lead to increased investor participation, liquidity, and mainstream adoption of Ether. On the other hand, denial could dampen investor sentiment and slow down the progress of integrating Ether into traditional investment vehicles.

Effect of denial on Ether price

If the spot Ether ETFs are denied approval, it is likely to have a temporary negative impact on the price of Ether. Investor expectations surrounding the potential approval of ETFs have likely contributed to the recent optimism and price appreciation of Ether. A denial could trigger a short-term sell-off as investors readjust their expectations and positions in response to the news.

Potential impact on investor sentiment

The denial of spot Ether ETFs could have broader implications for investor sentiment in the cryptocurrency market. While it may not significantly impact long-term fundamentals, the denial could create uncertainty and skepticism among investors. This could result in a cautious approach to investing in Ether and other cryptocurrencies until alternative investment options, such as ETFs, gain regulatory approval.

Insight from Bloomberg Intelligence ETF analyst

Bloomberg Intelligence ETF analyst James Seyffart’s prediction of Ether ETFs not getting approved in May reflects his analysis of the current regulatory landscape. His assessment takes into account the lack of engagement between the SEC and potential issuers, as well as the contrasting precedent set by spot bitcoin ETFs. Seyffart’s insight provides valuable perspective on the potential outcome for Ether ETFs.

Additional opinions and speculations

While James Seyffart’s analysis is significant, it is important to consider other expert opinions and speculations. Market participants, industry insiders, and analysts may have varying views on the likelihood of Ether ETF approval. These diverse perspectives contribute to a more comprehensive understanding of the regulatory environment and potential outcomes for Ether ETFs.

CoinDesk’s privacy policy and terms of use

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Block.one’s acquisition of CoinDesk and its impact

In November 2023, CoinDesk was acquired by the Bullish group, majority-owned by Block.one. Block.one and Bullish have interests in various blockchain and digital asset businesses, including significant holdings of bitcoin. The acquisition has potential implications for CoinDesk’s operations, but the media outlet continues to operate independently with an editorial committee safeguarding its journalistic independence.

Journalistic independence and compensation

To ensure journalistic independence, CoinDesk maintains an editorial committee that protects the integrity of its reporting. This committee helps maintain objectivity and prevents conflicts of interest that could arise from relationships with its parent company or other entities. Employees, including journalists, may receive options in the Bullish group as part of their compensation, but this does not compromise their journalistic independence.

Conclusion

Bloomberg analyst James Seyffart’s prediction of spot Ether ETFs not receiving approval in May sheds light on the regulatory challenges facing issuers seeking to launch these investment products. The lack of engagement between the SEC and potential issuers, in contrast to the precedent set by spot bitcoin ETFs, has led to a revised prediction of denial. The SEC’s final decision on May 23rd will have significant implications for the Ether market, investor sentiment, and the broader cryptocurrency industry. As market participants await the outcome, expert analysis and diverse opinions contribute to a comprehensive understanding of the potential impact of Ether ETFs on the cryptocurrency market.

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