Ethereum soars as odds of ETF approval jump to 75% — ‘SEC could be doing a 180’

Ethereum soars as odds of ETF approval jump to 75% — ‘SEC could be doing a 180’
Markets
Ethereum spot ETFs may see the light of day in 2024 after all. Credit: Shutterstock / Shutterstock.AI
  • Bloomberg Intelligence ETF analyst Eric Balchunas says the odds of the SEC approving the Ethereum ETFs have greatly improved.
  • The SEC's sudden change of attitude is leaving everyone scrambling, Balchunas said.
  • He upped his odds of approval to 75%, from 25%.

The odds that the Securities and Exchange Commission will greenlight Ethereum spot exchange-traded fund applications have just increased.

Bloomberg Intelligence ETF analyst Eric Balchunas, long bearish on the products’ odds, posted on X that chances of approval have shot up to 75% from 25%.

Balchunas said he was “hearing chatter this afternoon that the SEC could be doing a 180 on this (increasingly political issue), so now everyone is scrambling (like us everyone else assumed they’d be denied).”

“It’s what we’re hearing from multiple sources,” Bloomberg Intelligence ETF research analyst James Seyffart said. “Should see a bunch of filings over coming days if we’re correct.”

Ethereum soared 8% off Balchunas’ tweet, recently trading at $3,400.

“If the spot ETH ETF is approved, it will be a true shock to everyone I know in DC who’s close to this process,” Jake Chervinsky, chief legal officer at Variant fund, posted. “It means approval could signal a major shift in US crypto policy after the SAB 121 vote, perhaps more important than the ETF itself.”

Last Thursday, the Senate voted on a resolution to repeal a controversial accounting guidance from the SEC, called SAB 121, which critics say has deterred investment banks from offering crypto custody at scale.

President Joe Biden indicated that he would veto the provision if approved. Prominent Democrats, however, have sided with their Republican colleagues against the rule, raising speculation that the White House may back down.

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Deadline

If the SEC wants to approve the Ethereum ETF products, it will have to be fast about it. The deadline for VanEck’s Ethereum ETF application is on Thursday — and the SEC is unlikely to approve some of the filings ahead of others in order to avoid playing the role of a kingmaker.

Nate Geraci, president of ETF Store, said that even with the tight deadline, it would be possible for the SEC to approve one set of important filings, called 19b-4s, before the deadline, and then “slow play” the second set of filings, called S-1s.

The SEC must approve both set of filings before the ETFs could come to market.

Balchunas had previously told DL News that in light of the reported lack of engagement from the SEC with prospective issuers, Ethereum ETFs were unlikely to get approved before the end of 2025.

If the ETFs are rejected, issuers will likely wait until after the US presidential election to file again, because a victory for presumptive Republican nominee Donald Trump would probably mean a change of leadership at the SEC — perhaps in favour of someone less antagonistic toward crypto than current chair Gary Gensler.

Tom Carreras is a markets correspondent at DL News. Got a tip about Ethereum ETFs? Reach out at tcarreras@dlnews.com