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GSR Lowers Probability of Ethereum ETF Approval to 20%
Why did issuers introduce collateral to increase the difficulty of approval?
Grayscale Ethereum Trust Fund (ETHE) Premium Widens
According to The Block, cryptocurrency market maker GSR released a report on Wednesday lowering the estimated probability of “SEC approving the Ethereum spot ETF in May” from 75% in January to 20%.
According to the report, GSR analyst Brian Rudick stated that despite factors such as “Grayscale’s victory in the appeals court” and “the existence of approved futures ETF products,” which give Ethereum spot ETF many similarities to previously approved Bitcoin spot ETF, this is why GSR held a more optimistic attitude in January.
However, GSR’s analyst has now changed their stance and taken a more conservative approach to the possibility of approving the Ethereum spot ETF. Brian Rudick wrote in the report:
GSR’s analysts predict that the approval process for the Ethereum spot ETF may be longer than expected and may even involve litigation, with a high probability of approval not occurring until 2025-2026.
According to a previous report by Zombit, Bloomberg ETF analysts Eric Balchunas and James Seyffart have expressed similar concerns and lowered the probability of approving the Ethereum spot in May to 25%.
The potential approval of the Ethereum spot ETF does not look optimistic at the moment, but recently several issuers have modified their ETF applications to include Ethereum collateral in their products. While this can bring additional revenue and attractiveness to the product, it also increases the complexity and difficulty of obtaining regulatory approval.
Brian Rudick speculates that this move may be an attempt by issuers to induce a response from the negative SEC towards their applications or they may have already given up and their current efforts are only paving the way for future collateral. Brian Rudick added:
As the market becomes increasingly pessimistic about the potential approval of the Ethereum spot ETF, the premium of Grayscale Ethereum Trust Fund (ETHE) has also widened. According to yChart data, the premium rate of ETHE has expanded from around -8% in March to -24%, directly indicating market pessimism.
