Variant Fund CLO Doubts Ether ETF Approval In May

Variant Fund’s Chief Legal Officer, Jake Chervinsky, recently expressed skepticism regarding the SEC approving spot ether exchange-traded funds (ETFs) in the United States by the May deadline. 

Chervinsky recently emphasized that the SEC’s denial of spot ether exchange-traded funds is a possibility that shouldn’t be overlooked. According to Chervinsky, the complex legal and policy environment in Washington, DC, could be a significant factor leading to the rejection of the applications or the SEC requesting their withdrawal. A similar trend affected spot Bitcoin ETF applications, resulting in numerous delays, rejections, and withdrawals.

I’m not saying for certain that the spot ETH ETF won’t be approved by May 23.

I’m just saying that the legal issues and policy environment in DC make denial (or an SEC request to withdraw) more likely than general sentiment suggests.

“Blackrock always wins” is a lazy bull take.

— Jake Chervinsky (@jchervinsky) March 3, 2024

This cautious outlook comes despite the earlier approval of spot bitcoin ETFs, which had shifted market focus towards the potential for ether ETFs.

Different Opinions Concerning the Spot Ether ETFs Approval

SEC Chair Gary Gensler clarified that the approval for crypto ETFs was specific to Bitcoin alone and should not be interpreted as endorsing cryptocurrency ETFs. This stance is particularly pertinent for Ether, given Gensler’s view of most cryptocurrencies, apart from Bitcoin, as securities. 

Despite these challenges, leading financial institutions such as BlackRock, Fidelity, and Franklin Templeton have moved forward with their applications for a spot Ether ETF.

The crypto and investment communities have reacted differently to the prospect of ether ETF approvals. Bloomberg ETF analyst Eric Balchunas suggested a 70% chance of approval by May, contrasting with Chervinsky’s view. Balchunas also minimized the potential impact of Ether ETFs compared to Bitcoin ETFs, likening it to a lesser-known act following a major headliner. 

Yeah @JSeyff and I will have formal odds out soon but tbh and no offense to the eth ppl but this is such small potatoes vs spot bitcoin ETFs. It’s like the opening act coming on after the headliner. Using GenX bands it’s like Sister Hazel trying to follow Nirvana.

— Eric Balchunas (@EricBalchunas) March 2, 2024

However, more opinions differ within the industry, with some experts like Nate Geraci arguing that the demand and significance of spot ether ETFs are underestimated. 

Will go out on limb early & predict spot ether ETFs will be bigger deal than everyone thinks…

Spot bitcoin ETF demand was also severely underestimated.

Whether you like it or not, ETH has 1/3 market cap of BTC.

Spot bitcoin ETF category already approx $50bil.

Basic math IMO.

— Nate Geraci (@NateGeraci) March 3, 2024

As we near the May deadline, there is still much discussion surrounding the approval of Ether ETFs, which has brought attention to the regulatory uncertainty surrounding cryptocurrencies beyond Bitcoin. While some significant firms have applied to expand the crypto ETF market, the SEC remains cautious about classifying cryptocurrencies as securities.