Merely two days ago, fund managers VanEck and ProShares filed with the U.S. Securities and Exchange Commission (SEC) to bring Ethereum exchange-traded funds (ETFs) to the U.S. markets. However, the two firms broke news on Friday that they have both chosen to withdraw their active applications. 

Similar to the dozens of Bitcoin ETFs awaiting approval, the proposed ETFs would have been based on Ether futures contracts, alongside other financial products and “pooled” investment vehicles providing further exposure to Ethereum. 

“The Amendment relates to Vaneck Ethereum Strategy ETF, a series of the Trust,” read the amended S.E.C. filing. “No securities were sold in connection with the Amendment and the Trust has determined not to proceed with the offering of this series at this time.”

A ProShares filing followed a similar pattern, reading that Proshares would be “withdrawing the amendment because it has elected not to proceed with the registration process for the new series associated with the amendment.”

Now ProShares is withdrawing their Ether ETF filing. SEC may have had a conf call, Godfather-style. Ether, you’re out. pic.twitter.com/ZZ4b5zpx54

— Eric Balchunas (@EricBalchunas) August 20, 2021

While it remains unclear what caused the two firms to abruptly halt their efforts, many have assumed that there were conversations with regulatory bodies such as the SEC. With the Commission further delaying its review of Bitcoin ETFs, it’s certainly possible that the firms were told that gaining approval was unlikely anytime soon. 

Is Ethereum Still Too Small for the SEC?

As the 2nd largest cryptocurrency by market capitalization, Ethereum has continued to garner the interest of crypto enthusiasts and investors alike. However, in a larger, institutional scope, Ether is still dwarfed by Bitcoin. 

According to CoinGecko, there are over 27 publicly traded companies holding Bitcoin, with a cumulative value of $9.7 billion. In contrast, Ethereum has 3 total companies across the global public market — with only one from the United States. Funnily enough, the figure would have been zero had Coinbase not recently announced that it would purchase $500 million in crypto assets.

Related Reading | Coinbase Set to Add Over $500M in Cryptocurrencies to Balance Sheet 

Moreover, with a total market value of $208 million, Ethereum holds a fraction of Bitcoin’s influence on corporations. All this information appears to point towards a lack of urgency in greenlighting Ethereum as a security — at least before Bitcoin. 

With Ethereum being pushed aside, all eyes seem to point towards Bitcoin futures products. Earlier this month, SEC Chairman Gary Gensler stated that, by further enforcing rules that ensure investor protection, a Bitcoin ETF could soon become a reality. 

In August alone, Invesco, ProShares, VanEck, Galaxy Digital and Valkyrie Funds filed for their respective Bitcoin ETFs. Wisdomtree, NYDIG, and VanEck still remain at the top of the pile, with the latter having filed in late 2020. It remains to be seen whether there will be further delays, which could once again set back the arrival of the long-awaited crypto ETFs in the U.S. markets.

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