Grayscale remains confident that spot Ether exchange-traded funds (ETFs) will be approved in May, despite concerns about the U.S. securities regulator’s lack of engagement. According to Grayscale Chief Legal Officer Craig Salm, the perceived lack of engagement should not be seen as an indication of the outcome. Salm believes that the ETFs should be approved and is not deterred by the regulatory situation.
Salm explained that many of the issues commonly associated with spot Ether ETFs have already been resolved, drawing parallels to the approval process for spot Bitcoin ETFs. These issues include creation and redemption procedures, cash and in-kind models, asset protection, loss prevention, and custody. Salm believes that the SEC has already engaged with these matters, and issuers have less to engage with this time around.
However, ETF issuers looking to incorporate staking into their spot Ether ETFs may face additional challenges in hashing out the details with the regulator. Some of the applicants seeking approval for spot Ether ETFs include Ark 21Shares, Fidelity, and Franklin Templeton.
Bloomberg ETF analysts Eric Balchunas and James Seyffart have expressed concerns about the SEC’s lack of engagement. As a result, they have lowered the odds of an approved spot Ether ETF in May to 25%. Balchunas described this percentage as pessimistic and suggested that the lack of engagement appears to be purposeful rather than procrastination.
Nevertheless, Salm believes that the recent approval of Ether Futures ETFs and the regulation of these products as commodity futures put the spot Ether ETFs in a favorable position for approval. He argues that futures and spot products have a high correlation, supporting the case for spot Ether ETFs.
Other industry figures, such as Coinbase chief legal officer Paul Grewal and former commissioner of the Commodity Futures Trading Commission Brian Quintenz, have also reached a similar conclusion.
The list of spot Ether ETF applicants vying for SEC approval includes BlackRock, VanEck, ARK 21Shares, Fidelity, Invesco Galaxy, Grayscale, Franklin Templeton, and Hashdex. VanEck’s application must be decided by May 23, and analysts expect all applicants to learn their fate on that date.