The Securities and Exchange Commission (SEC) appears to be leaning towards rejecting Ethereum ETF applications, even with the approval deadline looming just a month away.

Experts in the cryptocurrency industry anticipate that Ethereum (ETH) spot ETFs may face disapproval from regulatory authorities next month, hindering their public trading acceptance.

A potential refusal would mean that U.S. investors will have to wait until December 2024 at the earliest to access such a product, positioning Ethereum significantly behind Bitcoin (BTC) in terms of adoption by Wall Street.

Why Is the Likelihood of Ethereum ETFs Low?

Sources familiar with the matter state that meetings between the Securities and Exchange Commission (SEC) and prospective Ethereum ETF issuers have been disproportionately one-sided.

Despite the forthcoming deadline for applications from VanECK and ARK in less than a month, the regulatory agency has not engaged in substantial discussions around the proposed products.

This differs from the collaborative approach adopted during the internal deliberations preceding the approval of Bitcoin spot ETFs in January. At that time, regulators worked closely with sponsors to refine their applications over several months, focusing on details like in-kind versus in-cash redemptions.

Todd Rosenbluth, the Head of ETF analysis at VettaFi, expressed skepticism, suggesting that the approval may not come until later in 2024 or beyond due to the regulatory uncertainties.

Arguments presented by ETF issuers in favor of approval are largely centered around the listing of Ethereum futures ETFs in October, establishing a precedent indicating that ETH-based investment vehicles are suitable for public markets.

The lack of specific counter questions from the SEC implies that applications are not being treated with serious consideration and are likely to face rejection ultimately. With potential lawsuits looming as a consequence, the approval of ether ETFs may only materialize after court intervention, should a denial prompt legal action.