• Polymarket data shows that bettors are growing pessimistic about the Securities and Exchange Commission approving an Ethereum product by the end of May.
  • Hopes were already fading, but fell further after reports that the SEC was investigating the Ethereum Foundation.

Hopes are fading fast among bettors that the US Securities and Exchange Commission will approve a spot Ethereum exchange-traded fund by the end of May.

Bettors put those odds at 24% on Polymarket, a blockchain-based betting site that allows users to wager on binary outcomes.

That’s down from 82% at the start of 2024. The odds slid to 50% for the first time just a couple of weeks later, as hopes waned.

The optimism reached its lowest point — 17% chance — late on Wednesday, as media reported that the SEC was investigating the Ethereum Foundation with a view to classifying Ether as a security.

That’s a move that would put paid to Ethereum ETFs, at least for now.

Even prior to the news, Bloomberg analysts Eric Balchunas and Jamie Seyffart on Wednesday put their odds of the SEC approving an Ethererum ETF at 25%.

The SEC hasn’t displayed the same level of engagement on “Ethereum specifics” that it had with issuers of Bitcoin ETFs, Seyffart wrote in a post on X on Tuesday.

“My cautiously optimistic attitude for ETH ETFs has changed from recent months. We now believe these will ultimately be denied May 23rd for this round,” he wrote.

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May 23 is the final deadline by which the SEC must approve an Ether ETF.

BlackRock, Fidelity, Grayscale, Invesco, VanEck, Ark, and Hashdex are hoping to be allowed to provide an Ether fund.

High hopes

In January, the SEC approved 10 spot Bitcoin ETF applications from investment giants like BlackRock and Fidelity, sending optimism soaring that similar approvals for an Ethereum product would follow.

Gensler might be unwilling to approve ETFs as he’s getting political blowback from progressive politicians, according to Balchunas.

The SEC chair only approved spot Bitcoin ETFs because he was forced to by the courts, and is suffering political blowback from progressive politicians, Balchunas said.

Also, Gensler believes Ethereum is a “security in his heart,” Balchunas wrote in a Wednesday X post.

Punters have placed over $2.2 million on the Polymarket bet that Ethereum ETFs will be approved before the end of May.

Joanna Wright is a regulation correspondent at DL News. Got a tip? Email her at joanna@dlnews.com.

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