Peter Smith
Ethereum ETFs face uncertainty as experts suggest a delay in approval, citing regulatory challenges and the dominance of Bitcoin ETFs in the market.
Ethereum ETFs Facing Regulatory Hurdles
Ethereum ETFs may not see the light of day anytime soon, with experts suggesting a delay in approval amid regulatory complexities. Matt Hougan, CIO of Bitwise, argues that launching spot Ethereum ETFs after the hype surrounding Bitcoin ETF subsidies could lead to better performance.
Bitcoin ETFs Dominate Traditional Markets
Since their debut on January 11, Bitcoin spot ETFs have garnered significant attention, accumulating $12 billion in net inflows. Bitwise, a major player in the ETF market, now holds nearly $2 billion in BTC on behalf of its clients. However, Hougan emphasizes that traditional financial institutions still need time to fully embrace Bitcoin ETFs, indicating potential challenges for Ethereum ETFs.
A survey conducted by Bitwise revealed dwindling interest in Ethereum among financial advisors, with Bitcoin remaining the favored choice. Despite Ethereum's potential, stablecoins appear to be generating more enthusiasm, hinting at a multi-trillion-dollar market by 2025, according to insights from the Blockworks DAS conference.
Ethereum ETF Approval Unlikely by May
Experts from Bloomberg's ETF team share skepticism regarding the approval of Ethereum ETFs by the SEC's May 23 deadline. Eric Balchunas considers Ethereum spot ETFs to be insignificant compared to their Bitcoin counterparts. James Seyffart underscores the lack of communication between regulators and issuers, casting doubt on timely approvals.
The promise of staking a portion of ETF assets on the Ethereum network poses further challenges for issuers like Fidelity and Ark. Legal uncertainties surrounding blockchain staking and proof-of-stake cryptocurrencies, particularly in SEC litigation, contribute to the regulatory impasse.
Delayed Decision Expected
James Butterfill from CoinShares anticipates a delay in the SEC's decision on Ethereum ETFs, potentially extending into the third quarter of 2024. He points to unresolved issues related to staking, suggesting a pattern of regulatory postponements observed in previous cases. Investors, optimistic about May, may face disappointment amidst regulatory uncertainties.
Peter Smith
