Jake Chervinsky, Chief Legal Officer at Variant, recently shared his doubts regarding the possibility of a spot Ethereum (ETH) ETF receiving approval this year. His insights point to a confluence of factors that could influence the Securities and Exchange Commission (SEC) in its decision-making process.
SEC Under Pressure Regarding Ethereum ETF Approval
Chervinsky underscores the SEC’s current predicament, where mounting political pressure and the backdrop of market turbulence may sway regulatory judgments, particularly concerning Ethereum ETFs. Despite the SEC’s previous success in greenlighting Bitcoin ETFs, the agency now faces a different landscape characterized by heightened political scrutiny and market volatility.
I am a lot less confident about ETH ETF approval this year than many of you are.
The SEC got a ton of political blowback for approving BTC ETFs, even though the court basically forced it to.
Now animal spirits are in control of the market, and an ETH ETF would only add to that.
— Jake Chervinsky (@jchervinsky) March 1, 2024
One of Chervinsky’s central concerns is the potential exacerbation of market hype that could accompany the introduction of an Ethereum ETF. Market hype, driven by emotional factors rather than fundamental value, could further inflate the current speculative fervor surrounding cryptocurrencies.
Furthermore, Chervinsky suggests that the SEC might find legal justifications to deny Ethereum ETFs, even if such reasons are unfounded. He points to the agency’s willingness to adopt contentious legal stances to serve political agendas, indicating a complex interplay of legal, political, and market dynamics shaping regulatory outcomes.
Despite BlackRock’s past successes in securing ETF approvals, Chervinsky hints that the company’s influence might not guarantee similar outcomes for Ethereum ETFs. He speculates that if the SEC were to signal disapproval by requesting sponsors like BlackRock to withdraw their applications, compliance would likely follow.
While Chervinsky remains skeptical about the timeline for Ethereum ETF approval, he acknowledges that it’s not a question of “if” but “when” such approval will materialize.
Meanwhile, analysts’ predictions regarding the likelihood of Ethereum ETF approval have fluctuated. Initially, there was optimism, with estimates suggesting a 60% chance of approval in May. However, the SEC’s decision delays, particularly regarding requests from entities like Grayscale, have prompted analysts to reassess their forecasts. Despite the uncertainty, figures like CNBC’s Jim Cramer remain hopeful about imminent approval.
Entities Seeking Approval for Ethereum ETFs
Several investment management firms, including BlackRock and Grayscale, have expressed interest in Ethereum ETFs. These companies have submitted applications to the SEC, hoping to tap into the growing demand for cryptocurrency-based investment vehicles. Despite the regulatory hurdles and uncertainties, these firms are positioning themselves to capitalize on the potential approval of Ethereum ETFs in the future.
