Title: SEC "Changes Face", Approval of Ethereum Spot ETF May Just Be a Matter of Time
The pessimistic sentiment that has pervaded the market for months seems to have dissipated overnight. There are "rumors" that the US Securities and Exchange Commission (SEC) has requested applicants to expedite the update of the 19b-4 filing. Subsequently, Bloomberg ETF analysts Eric Balchunas and James Seyffart announced that the probability of approving the Ethereum spot ETF has been raised from 25% to 75%. Following a series of positive news, Ethereum surged by 24.26% within 24 hours, marking a sudden bullish trend.
According to CoinDesk, three sources familiar with the matter stated that the US SEC has requested exchanges to expedite the update of the 19b-4 application, indicating that they may approve these applications before the crucial deadline on Thursday.
However, this does not mean that the ETFs will be approved. Updating the 19b-4 filing is a crucial step, but more work needs to be done to ensure the final approval of the ETF. Potential issuers need to obtain S-1 application approval before the product starts trading.
One source indicated that the SEC may need an uncertain amount of time to approve the S-1 filing, as there is no deadline for it. A company currently in negotiations with the SEC expressed a feeling that they may be on the right track to approval, whereas just a few weeks ago, they felt that the SEC was dragging its feet.
Following the news of the SEC's request for applicants to expedite the update of the 19b-4 filing, Bloomberg ETF analysts Eric Balchunas and James Seyffart raised the probability of approving the Ethereum spot ETF from 25% to 75%.
Eric Balchunas stated: "James Seyffart and I are raising our odds of an Ethereum spot ETF approval to 75% (from 25%), as we heard this afternoon that the SEC might be doing a 180 on this (increasingly political) issue, so now everyone is scrambling (like us, everyone else thought they would be rejected)."
It is reported that the US SEC must make a final decision on VanEck's Ethereum spot ETF application by May 23. However, Seyffart explicitly stated that the approved 19b-4 must be accompanied by a signed S-1 registration statement in order to launch the Ethereum spot ETF. Even if the 19b-4 is approved this week, the S-1 may still need several weeks or even months to obtain approval.
"In other words, if our prediction is correct, we should see these theoretical approvals later this week. This should mean that the S-1 approval is a 'when' question, not an 'if' question…"
James Seyffart subsequently listed all the applications for the Ethereum spot ETF, to which Eric Balchunas replied: "Heard SEC wants revised 19b-4s in by 10am tomorrow morning (based on a ton of comments they just got today), could be approved as soon as Wednesday."
Despite the Biden administration's recent adoption of a more aggressive anti-crypto policy stance, Eric Balchunas pointed out that the increasing politicization of cryptocurrencies is a driving factor behind this sudden shift.
Furthermore, former President Trump essentially pledged that if he were to return to the White House in the upcoming election, he would be a pro-crypto president. Then, 12 Democratic senators joined the ranks of Republicans last week in overturning the SEC's staff accounting bulletin (SAB) 121. This move may indicate that more Democrats are seeking to win the favor of crypto-supporting voters, similar to Republicans in the past.
Nevertheless, industry observers have listed several reasons why the SEC may not be ready to allow the Ethereum spot ETF to start trading.
Matteo Greco, an analyst at Fineqia International, stated in a research report on Monday: "Concerns about the liquidity of the ETH spot and futures markets, as well as previous concerns classified by the SEC as securities, have raised doubts about the rapid approval of ETH."
Related reading: 180° Turnaround! Spot ETF Approval in Sight, ETH Surges 18%
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