Ethereum ETF has no hope of passing? How do industry insiders interpret it?

On March 27, Fidelity, which manages $4.5 trillion in asset management, backed a proposed spot Ethereum ETF.Submitted Form S-1, including pledges.

At the beginning of this year, the U.S. Securities and Exchange Commission (SEC) approved the first spot Bitcoin ETF in the United States, and Fidelity was one of the first 11 issuers. Due to the precedent of the adoption of a spot Bitcoin ETF, many predict that the release of Ethereum will be a matter of time.

After delaying the resolution of multiple Ethereum ETH applications this year, Bloomberg analyst James Seyffart said that the SEC today postponed the decision on the Invesco and Galaxy Ethereum ETF applications, which is 100% in line with expectations and will continue in the next few months. More postponed decisions continue to occur. At the same time, he emphasized that the key date for Ethereum ETF spot is May 23, which is also the final deadline for VanEck application.

Pessimist

However, with just over fifty days left before the deadline for ETH ETF approval, it was reported that the Ethereum Foundation (the Swiss non-profit organization at the core of the Ethereum ecosystem) is under investigation by a national authority. However, as of press time, the scope and focus of the investigation were unclear because the investigation was subject to a confidentiality agreement. The Ethereum Foundation also did not respond to a request for comment.

A lawyer familiar with the situation said the Swiss regulator may have submitted a document request to the Ethereum Foundation and may be working with the U.S. Securities and Exchange Commission (SEC). The lawyer said that the Ethereum Foundation is not the only entity required to submit information, and other overseas entities are also under review.

Therefore, the forecasts of some institutions are pessimistic. Alex Thorn, head of company-wide research at Galaxy Digital, said approval in May now looks highly unlikely.

On March 21, a person from a company that recently received a subpoena request revealed that the U.S. Securities and Exchange Commission’s (SEC) investigation into the Swiss-based Ethereum Foundation follows a September 2022 blockchain shift known as “ The new governance model of Proof of Stake began shortly after.

Proof of Stake moves Ethereum away from the energy-intensive model used by Bitcoin and instead relies on a network of trusted validators, and gives the SEC a new excuse to try to define Ethereum as a security. , according to people familiar with the subpoenas at three different companies.

“The SEC has issued subpoenas to a number of cryptocurrency companies regarding their ties to the Ethereum Foundation, coupled with the SEC’s lack of active engagement with ETF applicants two months before the first deadline. Significant doubts arise about May approval, Alex Thorn wrote in a note on Friday.

At the same time, market maker GSR analyst Brian Rudick also said in a report on Wednesday that he believes that the SEC is currentlyThere is a 20% chance of a spot Ethereum ETF being approved in May,Compared with the 75% possibility predicted by GSR in January, this is a significant downward revision. Analysts say there is some political pressure on the U.S. Securities and Exchange Commission not to approve more digital asset ETFs. The U.S. Securities and Exchange Commission’s investigation into whether Ethereum is a security may significantly reduce the likelihood of approval. Regulators may seek to avoid turning the potential approval of an Ethereum spot ETF into “another big-money event.” Regarding future expectations, analysts believe that any approval process for the spot Ethereum ETF may take longer and may be affected by some litigation events. It now believes that the spot Ethereum ETF is most likely to be approved in 2025 to 2026.

optimist

The SEC is reportedly currently looking into the question of whether Ethereum is a security. Fortune reported earlier this month that regulators were seeking to classify ether and had issued subpoenas to several companies as part of the investigation.

But BlackRock CEO Larry Fink expressed great optimism and confidence in the possibility of the adoption of an Ethereum ETF. BlackRock CEO Larry Fink said an Ethereum ETF is still possible even if the U.S. Securities and Exchange Commission designates the cryptocurrency as a security, which would increase regulatory scrutiny surrounding the second-largest digital asset.

On-chain data analyst Q (@tocuee) stated on social media that he discovered that the same withdrawal behavior of ETH occurred before the BTC ETF was passed in 2023. In the past 24-48 hours, more than US$1 billion of ETH has been withdrawn from CEX, and such large, violent and continuous withdrawals have been occurring for quite some time, and were first observed in December last year.

Similar behaviors of these addresses: new addresses, large amounts, and the exchanges involved. Kraken and Coinbase are mainstream exchanges in Europe and the United States, while Binance and Okx also exist. Combined with the news that Fidelity submitted the S-1 application form for the ETH ETF, Q speculates that the ETH ETF will most likely be approved.

Currently, eight potential issuers, including BlackRock, have filed documents with the SEC to bring spot ether exchange-traded funds (ETFs) to the market. The regulator’s final decision is due in May, and industry experts predict that regardless of the SEC’s perceived nature of Ethereum, the application will not be approved.

As of the time of writing, the price of ETH is US$3,503. Since this year, Bitcoin has dominated the entire encryption market. Various “Ethereum killers” such as Solana have also been rounding up Ethereum. Compared with the high sentiment in the overall encryption market, Ethereum The mood in the community was not good. Can Ethereum ETFs not save the weak ETH? the Ethereum community asked.