Bloomberg ETF analyst James Seyffart has shifted his stance, indicating a probable rejection of a spot Ethereum ETF by the U.S. Securities and Exchange Commission (SEC) on May 23, a departure from earlier optimism. This date marks the final deadline for the SEC to decide on the first spot Ethereum ETF seeking approval.

Previously, Seyffart and his colleague Eric Balchunas had given a 35% chance of approval in May. However, no outreach has been reported between potential spot ETH ETF issuers and the SEC, influencing this change in sentiment.

‍

Diminishing Approval Odds and SEC's Decisions

Balchunas, in a recent assessment, lowered the likelihood of the SEC approving a spot ETH ETF on May 23 to 35%, down from as high as 70% earlier this year. 

The SEC recently delayed the approval of two spot ETH ETFs, namely the Hashdex Nasdaq Ethereum ETF and the ARK 21Shares Ethereum ETF, further indicating the uncertainty surrounding the approval process.

According to the SEC, it is appropriate to designate a longer period for the Commission to consider the proposed rule change and the issues raised before issuing an order approving or disapproving it.

Currently, seven issuers are vying to launch an ether fund, including BlackRock, Fidelity, and Grayscale. 

Grayscale, in particular, is considering incorporating staking into its spot Ether ETF application. This move is aimed at addressing inflationary concerns stemming from Ethereum's proof-of-stake protocol and aligning with similar investment products offering staking opportunities.

In response to the evolving ETF narrative, ETH has witnessed a decline of 19% over the past seven days, trading around $3,286 at press time, as per CoinMarketCap data.