Crypto Lawyer Reveals Why ETH ETFs Are Unlikely This Year

The interest in bitcoin spot ETFs, which were only approved for the US stock market in January, is already considered a complete success. ETF inflows have exploded especially recently , showing how much investor interest there is in Bitcoin ETFs and the crypto world. American financial giants such as BlackRock anticipated this trend and last year filed their first applications for a spot ETF on Ethereum (ETH) . The final decision – at least for this year – is likely to be made next May 2024, as the deadlines for the US Securities and Exchange Commission (SEC) expire after that.

Many crypto experts expect a positive outcome and more crypto ETFs will follow soon after. Now, a well-known crypto lawyer has spoken out and explained why he believes the introduction of an Ethereum spot ETF is extremely unlikely.

The SEC could reject the ETH spot ETF for these reasons

Less than two weeks ago, the American crypto exchange Coinbase explained in an open letter to the SEC why applications for Ethereum spot ETFs cannot be rejected. However, now Jake Chervinsky – a famous crypto lawyer – has taken to social media platform X (formerly Twitter) and explained in several tweets why he thinks Ethereum ETFs will not come, at least this year.

Chervinsky cites the political voices that have publicly spoken out against the introduction of Bitcoin ETFs as one of the most important reasons. The SEC received a lot of criticism for its decision – even though a US court practically forced it to approve the BTC ETF.

I am a lot less confident about ETH ETF approval this year than many of you are.

The SEC got a ton of political blowback for approving BTC ETFs, even though the court basically forced it to.

Now animal spirits are in control of the market, and an ETH ETF would only add to that.

— Jake Chervinsky (@jchervinsky) March 1, 2024

At the same time, the lawyer points out that historically the SEC has often used dubious arguments to deny applications to achieve political goals. This is also extremely likely with respect to the Ethereum spot ETF – especially if political pressure increases.

Another reason for rejection could be that the current price of Bitcoin is particularly strongly influenced by human emotions. Chervinsky describes them as “animal spirits” and means an attitude of investors in which real value is no longer taken into account, but factors such as FOMO (Fear Of Missing Out) play an important role. However, this could be a sign to the SEC that US investors are not yet ready for an Ethereum spot ETF, as it would further encourage this unwanted change and development in the crypto and stock market.

BlackRock and other providers could withdraw applications for ETFs

US investor interest in BlackRock Ethereum ETF – the world’s largest asset manager – is extremely high after the company received billions of dollars in inflows with the launch of Bitcoin ETFs. But Chervinsky also cautions that the success of these bitcoin spot ETFs is because financial institutions have been able to work particularly closely with the SEC. The corresponding applications had to be revised several times before being approved in January.

Although BlackRock itself could exert strong political pressure, the asset manager is likely to withdraw its request if the SEC makes a corresponding request – which would not be unusual in the US, according to the crypto lawyer. BlackRock, Fidelity and other providers don’t want to get on bad terms with the SEC and would simply comply with the corresponding requirements.

#BlackRock's iShares Bitcoin Trust ( $IBIT ) hits $10B in AUM in just 7 weeks, a milestone that took the first U.S. gold ETF over 2 years to achieve. pic.twitter.com/ujWDrK0d01

— Satoshi Club (@esatoshiclub) March 4, 2024

However, an incredible amount of money is also at stake for financial institutions. BlackRock alone has crossed the $10 billion mark in terms of assets under management in the 7 weeks since the Bitcoin ETF was introduced on January 10th. In comparison, it took two years for the introduction of gold ETFs in the US market to reach such a level. This should surely be a sign that Ethereum spot ETF applications will remain relevant.