US Regulator Approves Applications to List Spot Ether ETFs

Jimmy Aki
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On May 23, the US Securities and Exchange Commission (SEC) approved applications from BlackRock, Fidelity, Grayscale, Bitwise, VanEck, Ark, Invesco Galaxy, and Franklin Templeton to list spot Ether exchange-traded funds (ETFs). This move potentially paves the way for these products to begin trading later this year.

Spot Ether ETFs Greenlight from SEC Shocks Crypto Communities

While the approved spot Ether ETFs forms have been approved, the ETF issuers still need their S-1 registration statements to go effective before trading can begin.

The SEC has recently started conversations with issuers about their S-1 forms, but it is unclear how long this process will take. Some analysts speculate it could be completed in weeks, while others note it has historically taken over three months.

In response to the spot Ether ETF approval announcement, Bloomberg’s ETF analyst James Seyffart commented that if the issuers work extremely hard, the process could be completed within a few weeks, but there are many historical examples where it has taken over three months.

It had seemed unlikely that the SEC would approve the Ether ETFs due to a lack of engagement with issuers, which the crypto community has heavily criticized. However, this changed when the SEC began requesting 19b-4 forms from issuers, surprising many within the agency. This led to speculation about what prompted the regulator’s sudden shift, as analysts started to predict the SEC reassessing its decision on spot ETF approval.

Recall that a bipartisan group of US lawmakers had on May 22 sent a letter to the SEC to approve the spot Ether ETFs.

They argued that the SEC should apply the same principles for spot Bitcoin ETFs approved earlier this year, demonstrating consistency and affirming the legal reasoning behind those decisions.

Meanwhile, there is speculation that Ethereum ETFs may not achieve the same traction as Bitcoin ETFs. Bloomberg ETF analyst Eric Balchunas estimated that spot Ether ETFs might capture only 10 to 15% of the assets that Bitcoin ETFs received.

Mainstream Adoption of Crypto Set to Kickoff

The US SEC’s latest approval provided another tailwind for the cryptocurrency industry’s push into mainstream finance.

Earlier this week, WisdomTree received approval from the Financial Conduct Authority (FCA) to list its cryptocurrency exchange-traded products (ETPs), WisdomTree Physical Bitcoin (BTCW) and WisdomTree Physical Ethereum (ETHW), on the London Stock Exchange (LSE). These products will be offered exclusively to professional investors.

On the same day, the US House of Representatives passed a landmark cryptocurrency bill, the Financial Innovation and Technology for the 21st Century Act (FIT21 Act), which aims to provide regulatory clarity for cryptocurrencies. The Republican-led bill garnered bipartisan support, passing with 279 votes in favor and 136 against.

The FIT21 Act proposes a framework that would exempt cryptocurrencies from many securities regulations if they achieve sufficient decentralization. This contrasts with the SEC’s current approach to crypto regulation and would likely place much of the industry outside the SEC’s jurisdiction.

While the FIT21 Act still needs to pass the Senate, its extensive bipartisan support marks a major endorsement for the industry.

About Jimmy Aki PRO INVESTOR

Based in the UK, Jimmy is an economic researcher with outstanding hands-on and heads-on experience in Macroeconomic finance analysis, forecasting and planning. He has honed his skills having worked cross-continental as a finance analyst, which gives him inter-cultural experience. He currently has a strong passion for regulation and macroeconomic trends as it allows him peek under the global bonnet to see how the world works.