According to industry sources cited by Reuters, the US Securities and Exchange Commission (SEC) is likely to reject applications for Ethereum-based spot exchange-traded funds (ETFs) next month. Experts believe that the SEC’s eagerly awaited decision, if negative, could lead to a significant downturn for the king of altcoins, ETH.
SEC Decision Expected on May 23-24
Notably, a consortium including BlackRock, VanEck, ARK Investment Management, and seven other organizations had applied to the SEC to offer an Ethereum-based spot ETF in the US.
The final decision on these applications is expected to be made on May 23 and 24. Moreover, according to sources close to the matter, the SEC, following mandatory discussions with the involved parties in recent weeks, is preparing to deny the companies’ requests to offer an Ethereum-based spot ETF.
The crypto world is keenly awaiting the SEC’s decision on Ethereum-based spot ETFs. However, sources indicating that the SEC will issue a denial are signaling potential setbacks for applicants and the cryptocurrency market, highlighting once again the regulatory hurdles inherent in introducing new crypto-based financial investment tools.
Potential Major Impact on ETH
The anticipated denial of applications for Ethereum spot ETFs stems from increased scrutiny surrounding the regulatory framework that governs financial products related to the altcoin king. The SEC’s effort to classify its presence as a security remains the major barrier facing Ethereum in the cryptocurrency market.
On the other hand, the expectation of a negative decision from the SEC for spot ETFs could cause a significant downturn for the altcoin king. Although experts have been pricing in more rejections than approvals for some time, an official denial from the US regulator could keep prices under pressure and lead to a sharp downward movement.
Indeed, prior to the news of the SEC’s likely denial, ETH was trading down about 3%, and the selling pressure on ETH intensified following Reuters’ report. As of this writing, the king of altcoins has been trading at $3,084 over the last 24 hours, down 5.63%. Experts argue that the $3,000 level is a critical threshold for ETH, and for the decline not to gain momentum, the price needs to stay above this threshold.
