• SEC was looking to label ETH as a security per a recent investigation.
• Lack of communication between applicants and the regulator was concerning.

Bitcoin [BTC] may have seen the light of day but the second-largest cryptocurrency, Ethereum [ETH], may not be as lucky to get its widely-anticipated spot exchange-traded funds (ETFs) approved in the U.S.

No ETH spot ETFs in May?

Alex Thorn, Head of Research at Galaxy Digital, said that the chances of approval in May – the final deadline for the first list of ETF applications – was “extremely unlikely.”

The pessimistic projection stemmed from the unfriendly stance taken by the U.S. Securities and Exchanges Commission (SEC), which was reviewing numerous applications for an ETH ETF.

SEC at odds with ETH?

The biggest contributor to the negative sentiment was a recent report by global business media company, Fortune, revealing a major push by the SEC to get Ether labeled as a security.

Fortune reported that the regulator also served subpoenas to several companies in recent weeks as part of an investigation into the Ethereum Foundation – a non-profit organization that supports Ethereum and related technologies.

The SEC’s stance on ETH has been murky, with top executives, including SEC Chair Gary Gensler, carefully avoiding the subject of whether ETH is a security or commodity.

The ambiguity perhaps also reflected in the lack of dialogue between the ETF applicants and regulator, highlighted previously in an AMBCrypto report as well. This was quite unlike the approval process of Bitcoin ETFs, during which the SEC regularly engaged with the issuers.

Back in January, British multinational bank Standard Chartered had predicted an Ether ETF approval by the 23rd of May, the final deadline for the first list of applications. However, with each passing day, the odds in favor of approval were shrinking

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Meanwhile, the SEC deferred its decision on whether to approve an ETH futures ETF by Grayscale – world’s largest digital asset manager. Note that the investment giant was also waiting for a decision on its application to convert its ETH trust (ETHE) into a spot ETF.

As of this writing, ETH was exchanging hands at $3,347, according to CoinMarketCap, suffering significant selling pressure in recent weeks.