Spot Ethereum ETF May Approval: Doubts Rise Amid SEC Subpoenas and Lack of Engagement

• Galaxy Digital’s Alex Thorn casts doubt on the May approval for spot Ethereum ETFs due to recent SEC actions.
• The SEC’s subpoenas to crypto firms and the Ethereum Foundation raise questions about ETH’s classification as a security.
• “An enforcement action against the Ethereum Foundation would be extremely irregular,” notes Thorn.

This article explores the challenges and implications of the SEC’s recent subpoenas on the potential approval of spot Ethereum ETFs, shedding light on the complex regulatory landscape Ethereum faces.

Unlikely Approval in May

Alex Thorn of Galaxy Digital highlights the improbability of a spot Ethereum ETF approval by May, attributing this outlook to the SEC’s recent legal actions and apparent disengagement with ETF applicants. With the SEC intensifying its inquiry into Ethereum’s operations and its foundational ICO, the pathway to ETF approval seems fraught with legal and regulatory hurdles.

The SEC’s Legal Campaign Against Ethereum

Recent reports of the SEC issuing subpoenas to investigate the relationships between crypto firms and the Ethereum Foundation have cast a shadow over Ethereum’s regulatory standing. This, coupled with the SEC’s silent stance on Ether’s security classification post-Merge, has sparked debate over the future of Ethereum and its assets in the eyes of U.S. regulators.

Ethereum’s Regulatory Quagmire

The SEC’s scrutiny of Ethereum’s initial coin offering and the network’s transition to proof-of-stake has muddled the waters further. Despite the launch of futures-based Ethereum ETFs, the Commission’s potential move against Ethereum for past ICO actions would mark a significant and contentious step in cryptocurrency regulation, challenging the foundation of Ethereum’s legal and operational framework.

Market Reactions and Future Outlook

Industry experts, including Bitwise’s Matt Hougan, echo Thorn’s skepticism, suggesting that delays in ETF approval might afford the market necessary time to adjust. However, such delays and the potential for regulatory action against Ethereum pose critical questions about the future of Ethereum ETFs and the broader crypto regulatory landscape.

Conclusion

The uncertainty surrounding the approval of spot Ethereum ETFs highlights the complex interplay between innovation in the cryptocurrency space and the evolving regulatory environment. As Ethereum stands at a crossroads, the decisions made in the coming months could have long-lasting implications for the industry at large.