Here’s Why US Election Will Determine Future of Ethereum ETFs

• Analysts argue that Ethereum spot ETFs may be delayed until the end of 2025. 
• They cite the SEC’s lack of engagement and ETH’s uncertain regulatory standing.
• However, Donald Trump becoming president could be a game-changer given his pro-crypto stance.

The fate of Ethereum spot exchange-traded funds (ETFs) in the United States appears to hang on the outcome of the upcoming presidential election. This outlook comes as expectations grow that the Securities and Exchange Commission (SEC) will deny current applications for Ethereum spot ETFs on May 23. 

Experts such as Bloomberg Intelligence analyst Eric Balchunas have voiced pessimistic views about ETH ETF approvals this month, citing SEC’s lack of engagement with issuers and Ethereum’s uncertain regulatory standing.

Moreover, they argued that the SEC’s ongoing investigation into the Ethereum Foundation further bolsters the skepticism. Balchunas believes that the approval of spot Ethereum ETFs may be delayed until at least the end of 2025. 

Upon denial this month, prospective issuers, such as BlackRock, Fidelity, and Ark Invest, are left with two tough choices: to follow in Grayscale’s footsteps and sue the SEC over the rejection or to wait and refile later.

Meanwhile, the U.S. election could be a game-changer, with the potential return of Donald Trump to the presidency. During an interview with CNBC in March, Trump asserted that his administration will allow Americans to pay for goods with Bitcoin. Additionally, Trump promised his government would not crack down on cryptocurrency.

Given Trump’s pro-crypto stance, Balchunas remarked, “If there’s a new president, you file again. Maybe you get approved. Or you sue. Either way, that will take a whole other year to play out.” Essentially, the upcoming election presents a critical juncture for the future of Ethereum ETFs.

Regarding taking legal action, despite Grayscale’s successful lawsuit against the SEC for Bitcoin spot ETFs, a similar legal battle for Ethereum ETFs seems unlikely. Grayscale has already faced over $12 billion in outflows after converting its Bitcoin trust into an ETF. 

As a result, the firm may not be eager to engage in another costly legal confrontation. Besides, other issuers are hesitant to antagonize the SEC, with the Bloomberg analyst stating, “None of these other firms want to piss off the SEC. Nobody else will step up.” 

With Trump as president, the crypto community expects that he would appoint a more favorable SEC chairman than Gary Gensler. If a new SEC chair is appointed by mid-2025 and filings are promptly resubmitted, the approval process could extend to December 2025.