BlackRock CEO optimistic on Ethereum ETF, but GSR analyst lowers approval odds to 20%

• SEC’s low attention poses a challenge to the approval of Ethereum ETFs.

• Larry Fink says he thinks an Ethereum ETF may still be approved even if the SEC classifies it as a security.

• GSR analyst lowers Ethereum ETF approval chance to 20%.

Ethereum ETF approval took more twists on Wednesday after Larry Fink, CEO of $10 billion asset manager BlackRock, said he "thinks" a spot Ethereum (ETH) ETF can still come to the market even if the Security and Exchange Commission (SEC) classifies it as a security. Amid speculations surrounding the ETF's chances of entering the market, analysts at market-making firm GSR have also tuned down the predictions of approval.

SEC not willing to engage

BlackRock is one of eight companies that have submitted filings with the SEC to launch a spot Ethereum ETF. As the SEC's decision on the ETF, which is expected in May, draws near, key players in the market have expressed diverse opinions on the chances of an ETF approval for the second-largest digital asset.

Discussions over an Ethereum ETF follow the successful launch of spot Bitcoin ETFs, which Larry Fink has said is "the fastest growing ETF in the history of ETFs." BlackRock's iShares Bitcoin Fund (IBIT) is the largest among the 11 spot Bitcoin ETFs in the market, with over $15 billion in assets under management. And the company is looking to exhibit the same success through a spot Ethereum ETF.

However, the SEC has been slow in responding to applications and has left many doubts due to its poor engagement with firms submitting applications. Fortune has also reported on the SEC's attempt to classify Ethereum as a security after the Commission issued subpoenas to three firms based on their transaction with the Ethereum Foundation. Ethereum's transition to a Proof of Stake consensus mechanism in 2022 also poses a challenge as yield bearing from staking could affect its commodity status.

Larry Fink provides a glimmer of hope

When asked by reporters of Fox Business if the SEC's recent actions would take Ethereum out of the Bitcoin category as a commodity and, in turn, harm its chances of an ETF, Larry Fink replied that he doesn't think that the SEC's designation is going to be that harmful to the possibility of an Ethereum ETF. After further pressing by the reporters asking if one could start a spot ETH ETF even if it's classified as a security, Larry Fink responded, "I think so, yeah."

Moreover, an analyst of market-making firm GSR, Brian Rudick, stated that the company had lowered its prediction of a spot Ethereum ETF approval chance to 20% from the 75% optimistic prediction it gave in January. He cited the SEC's low interest and political pressure against the approval of additional ETFs of digital assets as the main reasons. Two Democrat senators have earlier written to the SEC not to approve any more crypto ETFs, citing their high volatility as high risk for retail investors.

Many other analysts, including Bloomberg's Eric Balchunas and James Seyfarrt, have also downgraded their expectations of a spot Ethereum approval. In contrast, Coinbase and Grayscale chief legal officers have expressed hopes of a positive SEC response.