Craig Salm, the Chief Legal Officer at Grayscale, suggested that the US SEC’s “perceived lack of engagement” with spot Ethereum exchange-traded funds (ETFs) applicants wouldn’t be a decisive factor that would hinder the prospects of such products.

In a March 25 post on X (formerly Twitter), Salm said the Ethereum ETFs would be approved because “the SEC already has engaged” with the issuers during the application process for a spot Bitcoin ETF.

Why the SEC could approve Ethereum ETFs

According to him, during the approval of spot Bitcoin ETFs, the financial regulator worked out key issues, including creation and redemption processes, cash versus in-kind transactions, and custody concerns. He pointed out that these solutions apply to Ethereum due to its similarities with Bitcoin.

He remarked:

“All of these issues were figured out and are identical when comparing spot Bitcoin to Ethereum ETFs. The only difference is rather than the ETF holding bitcoin, it holds ether. So in many ways, the SEC already has engaged and issuers simply have less to engage on this time.”

Furthermore, Salm reiterated the arguments made by Paul Grewal, Coinbase’s chief legal officer, regarding the financial regulator’s need to approve a spot ETH ETF. Salm highlighted the consistent and robust correlation between ETH futures and spot prices, which reinforces the rationale for approval.

He added:

“Investors want and deserve access to Ethereum in the form of a spot Ethereum ETF and Grayscale believes the case is just as strong as it was for spot Bitcoin ETFs.”

Hopes dim for Ethereum ETF

In recent weeks, there has been growing skepticism regarding the possibility of regulatory approval for Ethereum ETFs.

The financial regulator has postponed the approval process for several issuers, prompting skepticism among market analysts. These delays, coupled with the minimal regulatory activity surrounding the applications, have dampened community optimism about the prospects of an Ethereum ETF.

Moreover, reports suggest that the SEC is investigating Ethereum’s regulatory classification as either a security or a commodity. This development adds further uncertainty to the approval prospects.