Investment management company Van Buren Capital partner Scott Johnsson has uncovered an important detail in the response from the U.S. Securities and Exchange Commission (SEC) to BlackRock’s Ether spot ETF application in March. According to Johnsson, this detail serves as an indicator of the SEC’s potential rejection of Ether spot ETFs.

Not Asked for Bitcoin Spot ETFs

In a tweet posted on X, Johnsson noted that while the possibility of an SEC rejection is anticipated by many analysts, this detail is significant:

‘The possibility of the SEC making a negative decision is known by many. I am aware of that, but this is the SEC’s official response… They are questioning whether Ether is a commodity. There is a question of whether the application was correctly made. This is important for their ETF decision they will make shortly. Remember, a similar question was not asked for Bitcoin spot/futures ETF applications.’

What Did the SEC Ask?

In the document shared by Johnsson on X, the SEC questions whether Ether is a commodity. The agency stated in its response to BlackRock, ‘Given the nature of the asset held by the fund, has the exchange properly filed the application under Nasdaq’s Rule 5711 for Commodity-Based Trust Shares?’

Eric Balchunas: Almost non-existent

Eric Balchunas, a Bloomberg ETF analyst, commented on the matter, stating, “The SEC is questioning whether the companies applying have framed their offerings as commodities. As I’ve said before, I see the likelihood of approval as virtually nonexistent.”

‘Even if they reject it, they won’t call it a security’

James Seyyfart, another Bloomberg ETF analyst, remarked, “As the SEC increasingly leans towards classifying Ether as a security, the possibility of rejecting these applications grows. Of course, we can’t know for sure. But they are considering putting this forward as a reason. My personal view is that even if there is a rejection, they won’t claim it as a security. We’ll see this within a few weeks.”

SEC Chairman Gary Gensler’s silence on the matter has been notable. Gensler last mentioned Ether ETFs, saying, “These requests are currently on the table… A commission of five will make the decision.”

Gary Gensler isn’t making comments!

Gensler, who serves as the chairman of the Securities and Exchange Commission (SEC), has faced sharp criticism from Republican Congressman Patrick McHenry, chairman of the Financial Services Committee in Congress, due to his unclear stance on the issue.