The United States Securities and Exchange Commission (SEC) is seeking public input regarding the potential approval of a spot Ethereum (ETH) ETF, according to an April 2 court filing.

The SEC called for comments specifically on Bitwise Ethereum Trust, Fidelity Ethereum Fund, and Grayscale Ethereum.

SEC Calls For Comment On Spot Ethereum Approval

According to the most recent court documents, the federal agency is looking “to solicit comments on the proposed rule change” from “interested persons.”

“The proposed rule change is designed to perfect the mechanism of a free and open market and, in general, to protect investors and the public interest in that it will facilitate the listing and trading of an additional type of exchange-traded product that will enhance competition among market participants, to the benefit of investors and the marketplace,” the court filing states.

What Are The Odds Of Spot ETH ETF Approval?

News of the SEC’s request for public comment follows the agency’s January 2024 approval of several spot Bitcoin ETFs, a move that many in the crypto community feel will prompt greater mainstream adoption of cryptocurrencies in the future. 

In the months since their approval, spot Bitcoin ETFs have surpassed the market capitalization of traditional silver ETFs, drawing in an estimated $862 million in inflows last week.

SEC Chair Gary Gensler cautioned the public that his agency’s approval of spot Bitcoin ETFs “should in no way signal the Commission’s willingness to approve listing standards for crypto asset securities.”

“Nor does the approval signal anything about the Commission’s views as to the status of other crypto assets under the federal securities laws or about the current state of non-compliance of certain crypto asset market participants with the federal securities laws,” he continued.

Getting tagged in tweets about this filing, the Eth corr study, and other eth etf hopium. I respect it all but our odds for Eth ETF approval in May remain a pessimistic 25% (I’d go lower if I could tbh). There’s 7 wks till deadline and radio silence from SEC = bleak. (Again,… https://t.co/fc8elrYm64

— Eric Balchunas (@EricBalchunas) March 28, 2024

Currently, experts estimate that the chances for spot Ethereum ETF approval by May have slimmed exponentially over the past few months, with Bloomberg ETF analyst Eric Balchunas putting the odds at “a pessimistic 25%.”

A Regulatory Divide At The SEC?

Under Gensler’s direction, the SEC has long taken an anti-crypto stance, often taking a regulation-by-enforcement approach instead of a clear regulatory framework.

At the Practicing Law Institute’s SEC Speaks event on Tuesday, Gurbir S. Grewal, the commission’s Director of its Enforcement Division, criticized the crypto sector for its “significant non-compliance” with regulation.

SEC Commissioner Hester Pierce, however, voiced rare dissent from within the agency over its enforcement approach – going so far as to say the SEC was “scaring people off.”

It’s unclear how this ideological divide within the federal agency will play out regarding the potential approval of spot ETH ETFs.