The approval of Bitcoin spot ETFs earlier this year marked a turning point for cryptocurrency adoption in traditional finance. Since then, institutional capital has flowed steadily into the digital asset ecosystem. With Bitcoin’s fourth halving now complete, market attention is shifting toward the next potential milestone: the Ethereum (ETH) spot ETF.
As the critical decision date—May 23, 2025—approaches, anticipation is building. However, unlike the optimistic sentiment that surrounded Bitcoin ETF approvals, the outlook for Ethereum’s spot ETF remains uncertain. Market signals, expert commentary, and regulatory hesitations suggest a more complex path ahead.
This article explores the current state of the Ethereum spot ETF race, analyzes key challenges, and evaluates whether it can still emerge as a defining narrative for May.
The Current State of Ethereum Spot ETF Applications
The journey toward an Ethereum spot ETF began in October 2024 when VanEck submitted the first formal application. Since then, major financial players including 21Shares & Ark Invest, Hashdex, Grayscale, Invesco & Galaxy Digital, Fidelity, BlackRock, and Bitwise have followed suit.
Under U.S. Securities and Exchange Commission (SEC) procedures, the final decision on these applications is expected by May 23, 2025—the 240-day deadline following VanEck’s initial filing. This date has become a focal point for investors and institutions alike.
Yet, confidence in approval is waning.
Unlike Bitcoin, which the SEC has treated as a commodity, Ethereum’s regulatory classification remains ambiguous. Its transition from Proof-of-Work (PoW) to Proof-of-Stake (PoS) has reignited debate over whether ETH should be classified as a security. The SEC has not officially clarified its stance, creating uncertainty that directly impacts ETF prospects.
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If the SEC rejects the Ethereum spot ETF applications, it could implicitly signal that Ethereum is considered a security—setting a precedent that might block similar ETFs for other altcoins. This makes the decision not just about ETH, but about the broader future of crypto investment products in regulated markets.
Market Sentiment: Skepticism Grows Among Experts
Industry leaders are increasingly vocal about their doubts.
Sun Yuchen, founder of TRON, recently stated he does not expect approval in May. He emphasized the need for ongoing education of regulators, noting that deeper understanding of blockchain technology is essential before favorable policies can emerge.
Jan van Eck, CEO of VanEck, acknowledged the possibility of rejection, saying his firm could be among the first to face denial. This rare admission from an applicant underscores the growing realism within the industry.
Further dampening expectations, insider reports suggest the SEC is poised to reject applications from both VanEck and ARK Invest. Analysts at Bloomberg, known for their accurate crypto market forecasts, have downgraded the likelihood of approval to around 20%. Similarly, Polymarket—a decentralized prediction platform—and GSR, a leading crypto market maker, reflect this pessimism with similarly low odds.
GSR even projects that a final decision could be delayed until 2025–2026, pushing any potential launch well beyond the current timeline.
Still, not all voices are pessimistic.
Grayscale continues to express strong confidence in approval. Having successfully converted its Bitcoin Trust into a spot ETF, the firm is now pushing hard to do the same with its Ethereum Trust (ETHE). Their legal and lobbying efforts may yet influence the outcome.
On-Chain Activity Hints at Market Divergence
Despite regulatory uncertainty, Ethereum’s on-chain activity tells a compelling story.
Data from CoinCarp shows that over the past 30 days, crypto exchanges have experienced a net outflow of more than 380,000 ETH. This suggests that investors are moving their holdings off exchanges—often interpreted as a sign of long-term conviction or anticipation of positive news.
On April 28, ETH prices surged after Franklin Templeton’s proposed Ethereum ETF (ticker: EZET) appeared on the DTCC (Depository Trust & Clearing Corporation) website—a procedural step that often precedes official listings. The event triggered market excitement and was followed by significant whale activity:
- Three new large holders withdrew a combined 11,557 ETH from Binance.
- A wallet linked to Sun Yuchen reportedly accumulated an additional 6,743 ETH.
However, counter-movements were also observed. Several large addresses simultaneously transferred ETH into exchanges, indicating profit-taking or hedging strategies. This divergence reflects a split in market sentiment—some betting on approval, others preparing for rejection.
Could Hong Kong Influence U.S. Decision-Making?
An often-overlooked factor is Hong Kong’s upcoming launch of Ethereum spot ETFs on April 30, 2025.
As one of the first major financial hubs to embrace crypto ETFs beyond Bitcoin, Hong Kong’s move could serve as a real-world case study for U.S. regulators. Strong investor demand and smooth operations in Asia might pressure the SEC to reconsider its cautious stance.
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Institutional advocates are likely to use Hong Kong’s experience as evidence that Ethereum ETFs can operate safely within regulated frameworks. If trading volumes and liquidity meet expectations, it could become a powerful argument in favor of U.S. approval—even if delayed.
Key Challenges Ahead
Several core issues continue to hinder Ethereum ETF approval:
- Regulatory Classification: Until the SEC clearly defines Ethereum as a commodity (not a security), spot ETFs face an uphill battle.
- Market Manipulation Concerns: The SEC has historically cited liquidity and price manipulation risks in spot markets as reasons for hesitation.
- Precedent Setting: Approving ETH could open the floodgates for thousands of altcoin ETFs—something regulators may want to avoid without clearer rules.
These challenges aren’t insurmountable, but they require time, dialogue, and data—all of which may push resolution beyond May 2025.
Frequently Asked Questions (FAQ)
Q: What is an Ethereum spot ETF?
A: An Ethereum spot ETF directly holds ETH tokens and tracks their real-time market price, allowing investors to gain exposure without owning or storing crypto themselves.
Q: Why is the May 23 date important?
A: It’s the final deadline for the SEC to rule on VanEck’s initial application. While delays are possible, this date marks a key decision window.
Q: How does PoS affect ETF approval?
A: The shift to PoS raises questions about whether staking rewards constitute unregistered securities offerings—a concern regulators have yet to resolve.
Q: What happens if the SEC rejects the applications?
A: Rejection could delay ETH ETFs by years and set a precedent that many altcoins are securities, limiting future product development.
Q: Can Hong Kong’s ETF launch influence the U.S.?
A: Yes. A successful rollout could provide regulatory validation and increase pressure on the SEC to act.
Q: Is there still a chance for approval in 2025?
A: While odds are low for May, later in 2025 remains possible—especially if market conditions improve and global precedents strengthen.
Final Outlook: A Delayed But Inevitable Step?
While approval by May 23 seems unlikely, the momentum behind Ethereum spot ETFs is far from dead. Regulatory clarity may take time, but growing institutional interest, global adoption trends, and increasing on-chain activity all point toward eventual approval.
For now, investors should prepare for delay—but not defeat.
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The Ethereum spot ETF may not define May 2025 as hoped—but it could still shape the second half of the year and beyond.
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