StakingMarketRegulationCryptostake ExplainsUncharted
Grayscale’s Chief Legal Officer Sees SEC Approving Ethereum ETF Despite Current Reluctance

SEC will give green light to Ether ETFs eventually, says Craig Salm

Grayscale's Chief Legal Officer, Craig Salm, has recently shared an optimistic outlook regarding the future of Ether (ETH) exchange-traded funds (ETFs), despite some industry concerns over the U.S. Securities and Exchange Commission's (SEC) apparent lack of proactive engagement. In a detailed post on the social platform X, dated March 25, Salm emphasized: 

“I don’t think perceived lack of engagement from regulators should be indicative of one outcome or another [...] I personally am not deterred by it and believe the ETFs should be approved.” 

This confidence is rooted in the precedents set by the approval processes for spot Bitcoin ETFs, where many procedural and regulatory hurdles similar to those facing Ether ETFs were effectively navigated.

Highlighting the SEC's prior engagements, he added: 

“So in many ways, the SEC already has engaged and issuers simply have less to engage on this time. The case is just as strong as it was for spot #Bitcoin ETFs.” 

Despite the challenges, the push for incorporating staking mechanisms within Ether ETFs presents a novel hurdle, with firms like Ark 21Shares, Fidelity, and Franklin Templeton among those navigating this complex landscape.

Regulatory hurdles and market perspectives

Bloomberg ETF analysts Eric Balchunas and James Seyffart have pointed out the SEC’s “lack of engagement” as a cause for concern, recently adjusting their expectations for an approved spot Ether ETF in May down to 25%. Balchunas, in a post on X from March 25, articulated a cautious stance, noting: 

"it was a pessimistic 25%," and suggested that the regulator's silence might be “purposeful” rather than mere “procrastination.”

Despite these concerns, the approval of Ether Futures ETFs and the regulatory framework surrounding these products have positioned spot Ether ETFs favorably, according to industry experts. Craig Salm’s confidence is echoed in the sentiment that futures and spot markets share a “high correlation,” implying a strong foundation for the forthcoming approval of spot ETFs. This optimism is bolstered by insights from Coinbase’s chief legal officer, Paul Grewal, and Brian Quintenz, a former commissioner of the Commodity Futures Trading Commission, who both recently affirmed the potential for regulatory convergence.

As the SEC gears up to make a decision on VanEck’s application by May 23, the anticipation among applicants including BlackRock, VanEck, ARK 21Shares, Fidelity, Invesco Galaxy, Grayscale, Franklin Templeton, and Hashdex reflects a significant moment for the industry.