Ethereum price trades above $4,000 while anti-Ether political campaigns downplay spot ETH ETF

Ethereum (ETH) price trades volatile on Monday’s European session, exceeding the $4,000 psychological level, gaining momentum after the weekend’s lull. Traders are watching for two key catalysts: the upcoming Dencun Hard Fork and the possibility that the  US Securities and Exchange Commission (SEC) approves a Spot Ethereum ETF, like it happened with Bitcoin.  

While expectations for the approval of an ETF run high, recent voices have downplayed this possibility due to political campaigns against crypto assets.

Also read: Over half a billion dollars in Ethereum has been burnt in the past month, ETH holders await Spot ETF approval

Ethereum Spot ETF could face rejection by SEC

Fox Business reporter Eleanor Terret said that optimism on the SEC’s approval of the Spot Ethereum ETF is waning. Terret said that the SEC has yet to engage with issuers and custodians that filed ETH ETF applications. This is different from the regulator’s treatment of the Spot Bitcoin ETF, which received much attention and engagement from the SEC staff. 

“Based on my conversations with people familiar, meetings in recent weeks have been very much one sided, with issuers and custodians trying to rally SEC staff to get the process rolling,” she said on her X account. “But [SEC] staff [are] not really engaging in meaningful ways like they did with the $BTC spot ETF applications,” she added.

Market participants’ anticipation is declining in response to anti-crypto politics of Senator Elizabeth Warren, Terret added, noting that anti-crypto campaigns stand in the way of Ethereum Spot ETF approval.

There is a possibility that the US financial regulator declines the Spot Ethereum ETF by the May 23 deadline of VanEck’s application. 

Rejection of Spot Ethereum ETF could expose SEC to new lawsuits

The SEC could reject the Spot ETH ETF on the grounds that Ethereum is a security. However, this would mean that the regulator unwinds years of implicit acceptance of Ether as a commodity and could open the door to new lawsuits. 

Nate Geraci, president of an investment advisory ETFStore says in a recent tweet on X: “If the SEC is comfortable with investors owning ETH futures ETFs, then they should be ok with Spot ETH ETFs. If question over whether ETH is security or commodity, that should have been addressed before approving ETH futures ETFs.”

Crypto experts on X believe that the regulator could reject the Ethereum ETF on grounds of correlation. VanEck research shows Ethereum Spot to Futures correlation is 99.8%, meaning “correlation” may not be the ideal ground for ETF rejection. If the regulator had to reject an ETF on grounds of correlation, it should not have allowed the Ether Futures ETF to trade, according to the findings of experts. 

DCinvestor, a crypto influencer and trader, warns community members from taking leveraged bets on a Spot Ethereum ETF approval. The influencer said it is better not to put too much pressure on one day (the May 23 deadline) or one decision (SEC’s approval/rejection). 

At the time of writing, with waning enthusiasm on Spot Ether ETF, ETH price is trading sideways, close to the $4,000 level.