Spot ether ETF decision week just got a bit more interesting

As Bloomberg analysts up their ether ETF approval odds, concerns about ETH’s liquidity and its possible status as a security remain

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It’s spot ether ETF decision week — a pre-Memorial Day celebration of sorts for a certain segment of the crypto and financial communities.

Or a letdown. 

The lead-up to the ruling didn’t seem to carry the same buzz as the Securities and Exchange Commission’s verdict on BTC funds in January. 

That perhaps changed a bit Monday.

After weeks of industry watchers expressing doubts that the SEC was ready to approve such funds, Bloomberg analysts changed their SEC approval odds from 25% to 75%.

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Ether rose above $3,500 just before 5 pm ET Monday — up about 14% on the day.

A person familiar with the spot ether ETF applications told Blockworks that “conversations are progressing.” They were granted anonymity given the sensitivity of the discussions. 

An SEC spokesperson declined to comment.

The Bloomberg analysts alluded to a potential regulatory change of stance given how crypto has appeared to become more of a political issue in recent days and weeks.  

Donald Trump has essentially promised to be a pro-crypto president if returned to the White House in the upcoming election. Then, 12 Democratic senators joined Republicans last week to pass a resolution to overturn the SEC’s Staff Accounting Bulletin (SAB) 121. The move could signal that more Democrats look to gain favor with pro-crypto voters the way Republicans historically have.  

Still, industry watchers have named several reasons they think the SEC might not be ready to allow spot ether ETFs to start trading. 

“Concerns over the liquidity of ETH’s spot and futures markets, along with its previous classification as a security by the SEC, contribute to skepticism about swift approval,” Fineqia International analyst Matteo Greco said in a Monday research note.

Read more: Why the SEC could choose to deny ether ETFs, and what could happen next

Others have pointed out the lack of SEC engagement with prospective issuers over the last weeks and months — a divergence from the many meetings the regulator had with fund firms ahead of the bitcoin ETF approvals.  

21Shares President Ophelia Snyder had previously countered that point, noting there was “less to look at” this time around given “how fresh most of the documentation is” following the bitcoin ETF approvals.

As the agency did with spot bitcoin ETFs, the SEC would have to approve the 19b-4 documents submitted by the stock exchanges on which these products would trade, as well as S-1 registration statements from the issuers.

The SEC is asking exchanges to update their 19b-4 documents “on an accelerated basis,” CoinDesk reported Monday, citing unnamed sources.

Nate Geraci, president of the ETF Store, said in an X post that the SEC could theoretically approve the 19b-4s and wait on greenlighting the S-1s as more engagement with issuers takes place. 

“This decision could be favorable for issuers, as traditional finance investors seem [to remain] strongly focused on BTC, potentially reducing market activity around ETH spot ETFs if launched next week,” Greco said in his research note.

Should the SEC reject the spot ether funds, issuers would need to re-submit their filings, restarting a 240-day clock. This could potentially lead to approval in this year’s fourth quarter, or in early 2025, Greco noted.  

Some lawyers have said issuers might look to sue the SEC if they reject the planned ether products given a court decision was what ultimately helped get US spot bitcoin ETFs to start trading.


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