The SEC is Looking For an Excuse to Deny Spot Ether ETF Proposals – Analysts

• Analysts have uncovered information on the SEC’s attempt to consider Ether as a security.
• The SEC requested commenters to address the details of its March filing concerning ETH ETFs.
• Scott Johnsson thinks the SEC is looking for grounds to disapprove the Ether ETF proposal.

According to a report, analysts have uncovered information on a March submission to the U.S. Securities and Exchange Commission (SEC) indicating potential consideration of classifying Ether as a security. Further details show that the commission took a step by asking commenters to address the sufficiency of the submission.

Besides addressing the classification of Ether, the SEC also required commenters to address any other details they wish to in the proposed rule change. The commission requested comments on the status of BlackRock’s Ether ETF proposal, asking if the Exchange made a proper filing. It also asked for comments regarding the proposal’s demand for similar conditions with the approved Bitcoin ETFs.

Reviewing BlockRock’s March filing, renowned finance lawyer Scott Johnsson highlighted that the SEC’s purpose in requesting comments is to find grounds to disapprove the Ether ETF proposal. According to Johnsson, The SEC wants to show that the proposals are improperly filed as commodity-based trust shares. Hence, they do not qualify if they are holding a security.

Johnsson said:

The obvious purpose is to potentially deny on the basis that these spot filings are improperly filed as commodity-based trust shares and do not qualify if they are holding a security.

Citing Johnsson’s review, Bloomberg’s Senior ETF Analyst Eric Balchunas noted that the SEC may be considering denying the proposed ETH ETF using the excuse of Ether being a security. Nothing has changed in the approval odds, which remains ‘slim to none,’ according to Balchunas. However, he commended Johnsson for digging deep to discover this aspect of the SEC’s filing.

On March 4, the SEC delayed its decision on the ETH ETF proposals from BlackRock and Fidelity. Instead, it opened a window for commenters to address the proposal details. The commission set a new deadline for May 23, even though many users think the chances of an ETH ETF approval on the said date are slim.