Grayscale confident in approval of Ethereum ETFs despite SEC hush

Despite recent concerns over the U.S. Securities and Exchange Commission’s (SEC) apparent lack of interaction with spot Ethereum (ETH) ETF applicants, Grayscale remains optimistic. Craig Salm, the Chief Legal Officer at Grayscale, addressed these worries in a post on X on March 25. He suggested that the regulator’s silence does not necessarily forecast a negative outcome. Salm pointed to the prior approval process of spot Bitcoin ETFs, highlighting that many procedural issues relevant to Ether ETFs have already been resolved.

Grayscale’s confidence stems from the belief that the SEC’s previous engagement during the spot Bitcoin ETF approval process has set a precedent. Salm noted that issues such as asset protection, loss prevention, and custody were thoroughly discussed and addressed for Bitcoin ETFs. He asserts that these developments have smoothed the path for Ether ETFs, reducing the need for extensive regulatory engagement this time around.

Analysts set cautious odds for Ethereum ETFs

The discussion around spot Ethereum ETFs has also touched on the integration of staking features, which presents an additional regulatory challenge. Applicants like Ark 21Shares, Fidelity, and Franklin Templeton are exploring options to incorporate staking into their offerings. This aspect of Ether ETFs requires further clarification and agreement with the SEC. Despite these complexities, Grayscale’s Salm remains unfazed, believing in the strong case for the approval of Ether ETFs.

1/ Recently, there’s been a lot of chatter about spot #Ethereum ETFs. I personally am not deterred by it and believe the ETFs should be approved. But right now I want to talk about how I think perceived “lack of SEC engagement” should be viewed at this point:

— Craig Salm (@CraigSalm) March 25, 2024

The SEC’s engagement—or perceived lack thereof—has been a point of debate among industry observers. Bloomberg ETF analysts Eric Balchunas and James Seyffart have recently expressed their concerns, adjusting their approval odds to a cautious 25%. They describe the SEC’s silence as possibly intentional. However, the recent approval of Ether Futures ETFs is seen by some, including Coinbase’s chief legal officer Paul Grewal and former CFTC commissioner Brian Quintenz, as a positive indicator for spot ETFs.

Grayscale bullish on cryptocurrency ETFs

The SEC’s decision on VanEck’s Ether ETF application, expected by May 23, is eagerly awaited by the industry. This date is a potential milestone when the fate of all applicants is revealed. Among the hopefuls are major financial institutions like BlackRock, VanEck, ARK 21Shares, Fidelity, Invesco Galaxy, Grayscale, Franklin Templeton, and Hashdex. These applicants are competing for the SEC’s green light, which could mark a significant development in the cryptocurrency investment landscape.

Grayscale’s stance suggests a belief in the eventual normalization and acceptance of cryptocurrency-based ETFs by regulatory bodies. Despite the current uncertainty and speculation surrounding the SEC’s intentions, the company views the precedent set by Bitcoin ETFs and the regulation of Ether Futures ETFs as strong indicators of future success.