The chances of getting the approval for an ETH ETF are getting slimmer by the day, as the SEC keeps its radio silence with potential fund issuers, says Senior Analyst at Bloomberg ETF, Eric Balchunas.

Related: SEC to Refrain from Approving Ethereum ETFs this Year, Crypto Lawyer Says

Chatting with Cointelegraph, Balchunas quipped that there are plenty of reasons why he’s now slashed the odds of an Ether ETF approval down to a mere 35%. The lack of communication from the U.S. Securities and Exchange Commission regarding Ether exchange-traded funds with issuers could spell trouble for those banking on an Ether ETF approval by May.

The analyst added, that he’s also received “reliable information” suggesting that the SEC might be deliberately keeping quiet about potential fund issuers.

The Securities and Exchange Commission ought to provide feedback, while issuers need to focus on addressing their concerns. They might have to refile — it’s a pretty lengthy process. The key thing is, that there are 73 days left until the deadline, and there’s been zero contact or comments from the SEC to the issuers. That’s a bad sign.

Gary Gensler Still Thinks of Ether as a Security

Balchunas also said that SEC Chair Gary Gensler’s stance on Ether could play a part, asserting that Gensler still sees Ether as a security and perhaps doesn’t want to endure another round of “political backlash” like he faced after approving spot Bitcoin ETFs and the SEC’s loss in the Grayscale lawsuit in August 2023.

I also feel like he feels he’s thrown the industry a bone. He’s had his crow with the lawsuit loss, and from his perspective, it’s like, ‘Okay, now you should be satisfied.’ Gensler views Ether as a security. He wouldn’t want to approve it if he didn’t see it as akin to Bitcoin. It all adds up.

Balchunas remarked that the ETF process for Ether feels like the “reverse” of what he experienced during the Bitcoin ETF race.

While acknowledging that it was a personal judgment or a “sixth sense” that didn’t form a significant part of the calculations determining his ETF approval odds, he nonetheless dubbed it an important guiding factor.

It’s just different from the Bitcoin ETF race. Whether it’s our sources, actual public documentation, or just our gut feeling, it all grew and became increasingly optimistic. Everything fueled each other with positivity. And so, naturally, our odds went up. This feels like the opposite.

The SEC Meeting Did Happen After All

On March 6th, the crypto giant Coinbase and asset manager Grayscale finally sat with SEC representatives to discuss rule changes for launching Ether spot exchange-traded funds (ETFs). 

 While many crypto industry experts saw this as a positive sign for ETF approval, Balchunas turned to the “strong” argument of VB Capital’s general partner, Scott Johnsson, as the best explanation for why it might not be so rosy.

Johnsson pointed out that the meeting wasn’t between potential fund issuers but was mainly focused on analyzing the correlation between ETH and BTC futures prices compared to spot prices.

The correlational analysis could serve as the basis for either approving or denying the ETF creation, though Johnsson felt denial was more likely, a sentiment echoed by Balchunas.

Other Analysts’ Views Echo Balchunas’s Concerns

In a message from X dated March 11th, ETF Store President Nate Geraci remarked it’s odd that the SEC approved several ETH futures ETF products in October, only to hold off on spot products in May, adding that there have been very few explanations as to why this would be the case.

Meanwhile, Matt Corva, Chief Legal Officer at Consensys, declared on X dated March 11th that the rejection of an ETH ETF could be a positive event in the long run.

If ETH disappears, they’ll be squashed by their political handlers, and they won’t have any arbitrary ground to fight other coins – it’s brilliant.

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Ultimately, Balchunas remained confident that the creation of a spot ETF for ETH is more a matter of “when” than “if,” asserting that approval is almost certainly inevitable in the end. According to him, if the SEC outright rejects all pending applications for Ethereum ETFs, the next most significant date to watch for would be Tuesday, November 5th, the day of the U.S. presidential elections.

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