The wait for an Ethereum exchange-traded fund (ETF) in the US continues. Industry leaders such as Justin Sun, founder of Tron (TRX), are expressing skepticism about the May approval. In a recent post on social media platform X, Sun stated that he believes the Securities and Exchange Commission (SEC) will likely reject the large number of applications currently under review.

TRON inventor pessimistic about Ethereum

This pessimism stems from the SEC’s perceived lack of understanding of the complexities of the cryptocurrency industry. Sun emphasizes the need for “long-term education with regulators” to close this knowledge gap. His comments echo the sentiments of many market analysts who give low odds to the May approval. Factors contributing to this skepticism include:

• Reducing SEC Participation: Unlike the Bitcoin ETF approval process, the SEC has taken a less active role in reviewing Ethereum ETF applications. This silence is interpreted by many as a lack of enthusiasm for the product.
• Classification Anxieties: Recent speculation suggests that the SEC may classify Ethereum as a security, which could significantly impact ETF approval. This concern is exacerbated by Consensys’ ongoing lawsuit against the Commission regarding the classification of the ETH.
• Negative Feedback from Meetings: Reports suggest that meetings between ETF issuers and the SEC have not been encouraging, leading to pessimism about the future of filings. Data from Polymarket reflects this negativity, with the probability of approval falling to 11% this year.

Despite the negative outlook, some optimism remains. Major players such as BlackRock and Grayscale continue to update their filings, undaunted by the SEC’s silence and potential rejection. Despite the recent delay in the SEC’s decision, Franklin Templeton’s spot Ethereum ETF has even appeared on the website of the Depository Trust and Clearing Corporation (DTCC).

SEC indecision on Ethereum ETF

Craig Salm, Grayscale’s Chief Legal Officer, remains confident in the benefits of a spot Ethereum ETF, emphasizing investor demand and drawing parallels with the successful launch of Bitcoin ETFs. The SEC’s indecision has cast a shadow of uncertainty over the industry. Long delays, exceeding six months in some applications, coupled with delays by major players such as BlackRock and Fidelity, have shaken confidence. In addition, the recent extension granted to Franklin Templeton’s application until June 11 further fuels speculation that many believe it could be rejected in May.

This pessimism is reinforced by comments from prominent figures such as VanEck CEO Jan Van Eck, who predicts that his firm’s application will be among the first to be rejected. Similarly, CoinShares CEO Jean-Marie Mognetti does not foresee any approval before the end of the year. Reports also suggest that many applicants are preparing themselves for rejection based on recent interactions with the SEC.

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