Spot Ethereum ETF Won't Be Coming Anytime Soon as Expected, Here's Why

Spot Ethereum ETF Won’t Be Coming Anytime Soon as Expected, Here’s Why

| Updated
by Bhushan Akolkar · 3 min read
Spot Ethereum ETF Won’t Be Coming Anytime Soon as Expected, Here’s Why
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While BlackRock CEO Larry Fink has shown interest in Ethereum by discussing tokenization, Sui Chung, the CEO of CF Benchmarks, believes that a comprehensive educational approach is essential for a deeper understanding.

Mark Yusko, the co-founder and CEO of Morgan Creek Capital, expressed skepticism about the approval of a spot Ethereum (ETH) exchange-traded fund (ETF) by the United States Securities and Exchange Commission (SEC) this year. Despite recent optimism following the approval of the first spot Bitcoin (BTC) ETF, Yusko believes the SEC’s stance toward cryptocurrencies remains unfavorable.

In an exclusive interview with Cointelegraph, Yusko contested Bloomberg ETF analyst Eric Balchunas’ 70% likelihood of a spot Ether ETF approval by May, stating:

“I’d probably say less than 50/50.”

He pointed to the SEC’s perceived hostility towards cryptocurrencies, as indicated by the agency’s head, Gary Gensler, on the day of the Bitcoin ETF approval.

Yusko also highlighted another potential obstacle, suggesting that the SEC may still view Ether as a security, in contrast to Bitcoin, which is classified as a commodity. These factors contribute to the uncertainty surrounding the regulatory landscape for spot Ether ETFs, making the likelihood of approval uncertain in the current year.

How Would Big Players Market Ethereum ETF

Sui Chung, the CEO of CF Benchmarks, an index provider for digital assets and partner firm on the BlackRock iShares bitcoin ETF (IBIT), recently expressed concerns over why it’s difficult to introduce a spot Ethereum ETF in the market.  

The marketing strategy for mainstream financial institutions, including BlackRock, Franklin Templeton, and Fidelity, introducing Ethereum (ETH) ETFs to traditional finance (TradFi) investors raises intriguing questions, according to industry experts. Chung highlighted the complexities in marketing ETH ETFs to investors who have already diversified their portfolios with Bitcoin.

He further emphasized the need for educational efforts by these financial institutions, particularly in explaining concepts beyond tokenization. Chung suggested that such initiatives should cover smart contracts, decentralized finance (DeFi), blockchain staking, and the Securities and Exchange Commission’s (SEC) stance on these aspects.

While BlackRock CEO Larry Fink has shown interest in Ethereum by discussing tokenization, Chung believes that a comprehensive educational approach is essential for a deeper understanding. Notably, Ethereum’s transition from the energy-intensive proof-of-work to a more sustainable validator model distinguishes it from Bitcoin.

However, Chung expressed skepticism about marketing Ethereum ETFs with an Environmental, Social, and Governance (ESG) focus, considering the controversies surrounding ESG investing in the current landscape. The challenge lies in effectively communicating the unique features of Ethereum and its potential benefits to a wider investor audience.

SEC Chair Ignores Questions on Ethereum ETF

During a recent interview on CNBC, Securities and Exchange Commission Chair Gary Gensler was questioned by host Andrew Ross Sorkin about whether the recent court decision influencing Bitcoin ETF approvals could serve as a precedent for the approval of an Ethereum (ETH) exchange-traded fund.

In response, Gensler refrained from expressing an opinion on the probability of an ETH ETF approval, leaving the question unanswered. The interview shed little light on the SEC’s stance regarding the potential approval of an Ethereum-based exchange-traded fund in the wake of recent developments in the cryptocurrency regulatory landscape.

Funds & ETFs, Market News, News
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