Ether ETFs Near Approval: SEC Clears Major Regulatory Hurdle

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  • SEC approval of essential regulatory filings for Ether ETFs brings them closer to market acceptance.
  • An increasing trend of regulatory interaction with cryptocurrency exchange-traded funds (ETFs) led to the approval.
  • If this milestone is achieved, the SEC may grant permission to other cryptocurrency exchange-traded funds (ETFs).

A week ago, I would’ve said you were a little crazy to think that these ETFs were going to get SEC approval,” a Bloomberg analyst said. Ether ETFs took a significant step toward becoming available in the U.S. as the SEC approved vital regulatory filings.

Ether ETFs Clear Major Hurdle, Though SEC Sceptical on Trading route

Just days ago, prospects for the ETFs looked bleak. Spot ether (ETH) exchange-traded funds took a giant leap toward reality on Thursday after the U.S. Securities and Exchange Commission approved essential regulatory filings tied to them, a milestone for the second-largest cryptocurrency.

They are not yet cleared to trade, though. The SEC blessed the so-called 19b-4 forms tied to the ETFs, but the regulator must approve their S-1 filings before investors can buy them.

The approval follows a stunning turnaround by the market regulator. After clearing spot bitcoin ETFs earlier this year, the SEC didn’t engage much with issuers on ether ETFs.

That has changed in recent days. “A week ago, I would’ve said you were a little crazy to think that these ETFs were going to get SEC approval,” James Seyffart, ETF analyst at Bloomberg Intelligence, said in an interview ahead of the decision. In a statement, a Grayscale spokesperson confirmed the regulator had approved its 19b-4.

“At Grayscale, we appreciate the opportunity to engage constructively with regulators as they review spot Ethereum ETFs, and we remain optimistic about the potential of bringing Ethereum further into the U.S. regulatory perimeter in the ETF wrapper,” they said.

Would-be spot ether ETF issuers include BlackRock, Fidelity, Grayscale, VanEck, Franklin Templeton, Ark/21Shares, and Invesco/Galaxy.

Ether ETF Approval Process

Although the approval of the 19b-4 filings suggests that regulators are willing to allow issuers to bring a spot ether ETF on the market, it only guarantees that they will ultimately approve the final S-1 forms filed by some issuers.

“There is likely to be a gap before we see S-1 approvals and these ETFs begin trading. My guess is that this will take at least a week, but likely more. If history is any guide it could be much longer and be measured in months. But I personally think the gap will be measured in weeks. Everyone is just guessing right now though.” Seyfarth said.

Regulators sent a shock wave through the industry on Monday when reports came out that issuers were asked to update their 19b-4 filings ahead of the SEC’s deadline to approve or deny one of the issuers, VanEck’s filing.

An SEC spokesperson said the agency would not comment beyond what’s in the order published Thursday.

ALSO, READ; Bitcoin Spot ETF Launch Triggers Volatility: Crypto Price Crash Looms in 2024.

In a statement, 21Shares Head of Legal Andrew Jacobson said the approval was “a significant step in the right direction.”

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In the event that ether exchange-traded funds (ETFs) are approved, there may be increased market stability and a reduction in volatility. [Photo/Medium]

Cboe Global Head of ETP Listings Rob Marrocco said the exchange, which plans to list five different spot ether ETF products, was “excited to expand our offerings” to the ETFs. The 19b-4 approval is a step toward those listings.

SEC’s Stance on Crypto ETFs

The introduction of spot bitcoin ETFs in January has already demonstrated significant benefits for the digital assets and ETF space, and we believe that spot Ether ETFs will similarly provide safeguards for U.S. investors, allowing them to gain Ether exposure in a transparent, well-regulated, and easily accessible structure,” he said.

He said the exchange would continue working with the SEC to bring the ETFs to market.

VanEck expects to be the first issuer to launch its spot ether ETF, said the company’s head of digital assets research, Matthew Sigal.

Market Impact of Ether ETFs

The approval ofthe ETFs has significant implications for the cryptocurrency market. Ether ETFs provide a regulated and accessible way for investors to gain exposure to Ethereum, potentially driving increased demand for the cryptocurrency. This could lead to more excellent price stability and reduced volatility in the cryptocurrency market.

ALSO, READ; Charting Hong Kong’s Path to Cryptocurrency ETF Dominance.

Furthermore, the approval of Ether ETFs may pave the way for other cryptocurrency ETFs to gain SEC approval. This could lead to broader adoption of cryptocurrencies as investment vehicles and further integration of digital assets into traditional financial markets.

In conclusion, the SEC SEC’s approval of critical regulatory filings for Ether ETFs marks a significant milestone for the cryptocurrency market. While there are still hurdles to overcome before these ETFs can begin trading, the progress made thus far is a positive sign for the future of cryptocurrency ETFs.

As the regulatory landscape continues to evolve, it will be interesting to see how Ether ETFs and other cryptocurrency investment products shape the future of the financial industry.

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