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The US SEC is expected to reject several applications for exchange-traded funds (ETFs) based on Ethereum, the world’s second-largest cryptocurrency, Reuters reported on April 25, citing industry insiders.

The decision, anticipated in May, follows recent discouraging interactions between ETF issuers and the SEC.

Firms such as VanEck and ARK Investment Management, among others, have submitted applications to the SEC for ETFs that would directly track the spot price of ether.

The agency’s decisions on these applications, with VanEck and ARK being the first in line, are due by May 23 and May 24, respectively.

Participants in recent meetings with the SEC described the talks as one-sided, with agency staff withholding substantive comments on the proposals. This marks a stark contrast to the detailed discussions that preceded the SEC’s approval of spot Bitcoin ETFs earlier this year.

Under the leadership of Gary Gensler, a noted crypto skeptic, the SEC has historically been cautious, citing concerns over market manipulation. However, the approval of spot Bitcoin ETFs earlier this year, which followed a court victory by Grayscale Investments against the SEC, had raised hopes among crypto proponents.

ETF issuers have argued that the approval of both spot Bitcoin ETFs and Ether futures-based ETFs should logically extend to spot ether products.

Despite their efforts to address regulatory concerns, the SEC’s non-committal stance in recent meetings has led many to anticipate a rejection, the report said.

Todd Rosenbluth, head of ETF analysis at VettaFi, told the newswire that approval might be deferred to later in 2024 or beyond due to ongoing regulatory uncertainties. Meanwhile, issuers like VanEck remain engaged, planning further disclosures to maintain dialogue with the SEC.

The potential rejection is already impacting the cryptocurrency market. Hong Fang, president of crypto exchange OKX, noted that while Etheruem’s price has risen this year, it lags behind Bitcoin’s gains — a disparity likely influenced by market anticipation of the SEC’s decision.

The SEC’s hesitancy may stem from a perceived need for more comprehensive market data on Ether. Recent speculation claims the regulator has initiated an inquiry into the Ethereum Foundation through Swiss authorities.

The post SEC cold-shoulders Ethereum ETF applicants in meetings, dashing hopes of May approval appeared first on CryptoSlate.

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