The possibility of a spot Ethereum (ETH) exchange-traded fund (ETF) being approved in the United States has taken a dramatic turn. Just weeks after skepticism dominated market sentiment, the odds of approval have surged from 25% to 75%, according to Bloomberg Intelligence analysts Eric Balchunas and James Seyffart. This sudden shift follows new developments indicating that the U.S. Securities and Exchange Commission (SEC) may be moving toward greenlighting these long-anticipated financial products.
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What Changed? SEC Signals Favorable Stance on ETH ETFs
Recent reports reveal that the SEC has informed major exchanges—including Nasdaq and Cboe—that it is “inclined to approve” applications for spot Ethereum ETFs. On Monday, the regulator requested that these exchanges quickly update their Form 19b-4 filings, a procedural step typically taken just before final approval. These amendments are expected to be submitted ahead of a critical deadline on May 23, 2025, when the SEC must issue a decision on VanEck’s proposed Ethereum ETF.
This marks a significant pivot from earlier hesitation. Previously, the SEC had delayed responses and raised concerns about market structure, custody, and whether Ethereum should be classified as a security. Now, its proactive engagement suggests growing confidence—or political pressure—to move forward.
While this momentum applies primarily to the 19b-4 exchange listing applications, it's important to note that ETF issuers must also secure approval for their S-1 registration statements. Unlike 19b-4 filings, S-1 reviews are not bound by fixed deadlines, meaning final launch timing remains uncertain—even if listing rules are cleared.
Political Winds Shift Ahead of 2025 Election
Analysts increasingly believe that political considerations are influencing the SEC’s evolving stance.
As the 2025 U.S. presidential election approaches, crypto policy has become a strategic battleground. Former President Donald Trump has positioned himself as a pro-crypto candidate, accepting cryptocurrency donations and engaging with NFT communities. In contrast, President Biden’s administration appears to be softening its regulatory posture to avoid alienating tech-savvy voters and innovation-driven investors.
Balchunas noted: “It looks like the political calculus may have shifted rapidly.” He added that the administration might want to appear less rigid on digital assets, especially after recent legislative moves signaled bipartisan support for crypto-friendly reforms.
One key example was the Senate’s 60–38 vote to overturn SEC Staff Accounting Bulletin 121 (SAB 121), which imposes strict accounting rules on firms holding crypto assets for clients. Notably, several prominent Democrats—including Senate Majority Leader Chuck Schumer—voted in favor of the repeal, signaling internal party support for lighter-touch regulation.
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Regulatory Clarity: Is Ethereum a Security?
A central obstacle to approving a spot ETH ETF has been the SEC’s long-standing uncertainty over Ethereum’s classification. The agency has investigated whether ETH qualifies as a security under U.S. law, particularly following Ethereum’s transition from proof-of-work to proof-of-stake in 2022.
If ETH were deemed a security, the SEC would likely block spot ETFs unless they comply with stringent registration requirements—something most issuers aim to avoid.
However, new insights suggest a potential compromise. Galaxy Digital’s research head Alex Thorn speculated that the SEC could adopt a nuanced position: treating ETH itself as a commodity, while viewing staked ETH or staking-as-a-service as securities. This would allow the agency to approve ETFs while maintaining consistency with its past legal arguments.
Supporting this theory, Fidelity recently updated its S-1 filing to state explicitly that its Ethereum trust will not stake ETH holdings—a move widely interpreted as preemptive compliance with potential SEC conditions.
Prometheum, a special-purpose broker-dealer, also launched a soft rollout of its Ethereum custody service—signaling growing institutional confidence in ETH’s legal standing.
Market Reactions and Price Outlook
The renewed optimism around ETH ETF approvals has already impacted market dynamics.
According to QCP Capital, if approved, Ethereum’s price could rise toward $4,000 in the short term**, with potential to reach **$5,000 later in 2025. Conversely, rejection could push prices back toward $3,000, increasing volatility across derivatives markets.
Meanwhile,渣打银行 forecasts even more bullish outcomes. Their latest report projects $15 billion to $45 billion in net inflows within the first 12 months of ETF launches, potentially driving ETH to $8,000 by year-end 2025**. For context, Bitcoin could hit **$150,000 in the same timeframe if institutional adoption accelerates.
These projections hinge on sustained regulatory clarity and investor demand—both of which appear to be aligning.
FAQ: Your Top Questions Answered
Q: What is a spot Ethereum ETF?
A: A spot ETH ETF directly holds physical Ethereum tokens and tracks their market price in real time. Unlike futures-based ETFs, it offers investors direct exposure to actual crypto assets without expiration dates or roll costs.
Q: Why did approval odds jump so suddenly?
A: The SEC’s request for expedited 19b-4 filing updates signals internal readiness to approve. Combined with political momentum and issuer concessions (like no staking), sentiment shifted rapidly among analysts.
Q: Does S-1 approval guarantee trading starts immediately?
A: No. Even if the 19b-4 rule change is approved, the ETF cannot launch until its S-1 registration is cleared by the SEC—an unbounded process that depends on disclosure completeness and regulatory review pace.
Q: Could the SEC still reject all applications?
A: Yes. Final decisions rest with the commission. While staff may recommend approval, commissioners can override based on broader policy concerns, including investor protection or market integrity.
Q: How might an approved ETH ETF affect Bitcoin?
A: Positive spillover effects are likely. Institutional validation of Ethereum could strengthen overall crypto legitimacy, boosting demand for BTC as a foundational digital asset.
Q: Will staking be allowed in approved ETFs?
A: Early signals suggest not. To ease regulatory concerns, major applicants like Fidelity have committed to non-staking structures—meaning investors won’t earn staking rewards through these funds.
The Bigger Picture: A Shift in U.S. Crypto Policy?
Beyond ETF mechanics, this moment may mark a turning point in U.S. digital asset regulation.
Jake Chervinsky, Chief Legal Officer at Variant Fund, observed that ETH ETF approval—especially after SAB 121 repeal—could signal a broader shift away from adversarial crypto oversight. Instead of treating blockchain innovation as inherently risky, regulators may begin recognizing its economic value and global competitiveness implications.
Haseeb Qureshi of Dragonfly Capital echoed this view: "Biden may not fully embrace crypto like Trump promises to—but softening policy now avoids losing an entire voter bloc."
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Final Thoughts
The surge in Ethereum ETF approval odds—from 25% to 75%—reflects more than just regulatory progress. It underscores how market forces, political strategy, and institutional preparedness are converging to reshape America’s relationship with digital assets.
With VanEck’s decision deadline approaching on May 23, 2025, all eyes are on the SEC. Whether approval comes this week or next month, one thing is clear: the era of crypto mainstreaming is accelerating.
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