Market on edge for SEC’s Ethereum ETF decision by 4th July

Spot Ethereum exchange-traded funds (ETFs) could expect a 4th of July launch, as reported by Reuters.

According to industry experts and market participants, talks between asset managers and regulators have entered the final stages. 

The U.S. Securities and Exchange Commission (SEC) may approve the ETFs soon if these ongoing discussions conclude successfully. 

A lawyer involved with one of the issuers has reportedly indicated that the firm is close to completing the “finishing touches” and expects final approval within the next week or two. Bloomberg ETF analyst James Seyffart also suggested that spot Ether ETFs could launch before 4 July.

A total of eight firms, including BlackRock (BLK.N), VanEck, Franklin Templeton (BEN.N) and Grayscale Investments, are eagerly awaiting this decision. 

On 23 May, the SEC approved 19b-4 filings from eight ETF bidders. Since then, asset managers have been finalising their Form S-1s, which need SEC approval before the ETFs can start trading. 

Bitwise and Fidelity are among the companies that have revised and resubmitted their applications. 

Grayscale, on the other hand, is particularly keen to convert its existing Ethereum Trust into an ETF.

This development follows the successful launch of spot Bitcoin ETFs in January, which ended years of negotiations with regulators. 

A “smooth” approval process

While SEC Chair, Gary Gensler, did not provided a specific timeline for the ETF launches, he stated that the progress is “going smoothly”.

This was revealed when he was speaking at a Bloomberg conference on 25 June. Gensler emphasised the importance of full disclosure in registration statements for the approval process. 

Explaining further, he said, “what is in front of us — and it’s done at a staff level — is what’s called the registration statements, the disclosure statements”. He reiterated that these disclosures are crucial for investors making informed decisions.

The January launch of spot Bitcoin ETFs was highly successful, initially attracting around $8 billion in assets, which grew to nearly $38 billion by late June. 

Despite this success, the Grayscale Bitcoin Trust also saw its holdings drop from $27 billion to $17.8 billion after converting its trust into an ETF. 

Earlier this month, BlackRock’s spot Bitcoin ETF reached a milestone with trading volumes exceeding $662 million, demonstrating growing investor interest and confidence in Bitcoin.

Institutional interest in Ethereum ETFs

When the SEC approved 19b-4 filings from major financial institutions, it signalled that spot Ethereum ETFs could soon be listed and traded on exchanges. 

This decision surprised the crypto community, given the SEC’s previous reluctance to engage with the industry. 

It marked a significant turning point for Ethereum, allowing traditional financial institutions and investors to access the cryptocurrency without holding it directly. 

ProShares recently submitted an updated S-1 registration statement for its spot Ethereum ETF, detailing the roles of various participants involved. 

In the same, it stated that the Bank of New York Mellon (BNY Mellon) will act as the transfer agent, processing purchase and redemption orders and maintaining ownership records. BNY Mellon will also serve as the fund’s administrator and cash custodian. 

Coinbase Custody will hold the Ethereum, while Coinbase Inc. will operate as the prime execution agency. Delaware Trust Company will act as the trustee, and ProShare Capital Management will be the fund’s sponsor. 

And lastly, Coinbase Credit is designated as the trade credit lender, allowing ProShares to borrow Ethereum and cash for transactions exceeding its trading balance.

These positive developments also helped $ETH to climb in price. However, since March 2024, it has been trading below the key price level of $4,000.

At the time of press, then altcoin king was changing hands for $3,466, up by over 2% in the last 24 hours.