Grayscale Expresses Confidence in Approval of Ether ETFs Despite SEC’s Limited Engagement

Grayscale remains optimistic about the approval of spot Ether (ETH) exchange-traded funds (ETFs) in May, despite recent concerns about the U.S. securities regulator’s perceived “lack of engagement” with applicants.

Craig Salm, Chief Legal Officer at Grayscale, addressed the issue, stating that the regulator’s level of engagement shouldn’t necessarily indicate whether ETFs will be approved or not. He emphasised his personal confidence in the approval process, stating, “I personally am not deterred by it and believe the ETFs should be approved.”

Source: Craig Salm

Salm pointed out that many of the challenges common to spot Ether ETFs had already been addressed in the months leading up to the approval of spot Bitcoin ETFs. These included matters such as creation and redemption procedures, asset protection, custody, and others. Hence, he believes that the SEC has already engaged substantially on these matters, leaving less for issuers to address this time around.

He further emphasised the strength of the case for spot Ether ETFs, asserting that it is on par with that of spot Bitcoin ETFs.

However, ETF issuers seeking to integrate staking into their spot Ether ETFs would need to resolve an additional issue with the regulator. Notable applicants in this category include Ark 21Shares, Fidelity, and Franklin Templeton.

Analysts at Bloomberg ETF, Eric Balchunas, and James Seyffart, expressed concern over the lack of engagement from the SEC, leading them to reduce the odds of an approved spot Ether ETF in May to 25%. Balchunas described this as a “pessimistic 25%,” suggesting that the lack of engagement appears to be purposeful rather than due to procrastination.

Nevertheless, Salm highlighted that the recent approval of Ether Futures ETFs and their regulation as commodity futures positions spot Ether ETFs favourably for approval, given the high correlation between futures and spot products.

Similar sentiments were echoed by Coinbase’s chief legal officer Paul Grewal and former Commodity Futures Trading Commission commissioner Brian Quintenz.

Various prominent entities, including BlackRock, VanEck, ARK 21Shares, Fidelity, and others, are among the applicants seeking SEC approval for spot Ether ETFs. The SEC is expected to make a decision on VanEck’s application by May 23, with analysts anticipating a collective decision for all applicants on that date.