The Race for Approval: Spot Ethereum ETF
In the United States, the Securities and Exchange Commission (SEC) has delayed its decision on applications from top asset managers Grayscale Investments and Franklin Templeton concerning the approval of a Spot Ethereum ETF.
TLDR
- Grayscale submitted Form S-3 for its Spot Ethereum ETF application to convert Ethereum Trust (ETHE) into a Spot Ethereum ETF.
- Grayscale also filed an S-1 for a mini Ethereum ETF, following a similar move for a mini Bitcoin ETF.
- The SEC postponed decisions on Grayscale’s and Franklin Templeton’s Spot Ethereum ETF applications until June 23 and June 11, respectively.
- The delay was due to the SEC needing more time to assess proposed rule changes and related issues.
- Analysts are skeptical about the approval of Spot Ethereum ETFs by the SEC, citing concerns about Ethereum’s staking feature and the SEC Chair’s views on crypto assets as securities.
Grayscale, a key player in the crypto space, has actively pursued converting its Ethereum Trust (ETHE) into a Spot Ethereum ETF. The company submitted Form S-3 with the SEC, a crucial step in its plan to secure approval for its Spot Ethereum ETF application, providing essential documentation for the SEC’s review.
Grayscale also filed an S-1 for a mini Ethereum ETF under the ticker “ETH,” following a similar move for a mini Bitcoin ETF, marked as “BTC,” which is awaiting SEC approval.
Grayscale has not only focused on regulatory filings but also sought to list its Ethereum Trust on the NYSE Arca exchange as a Spot Ethereum ETF. This entails NYSE Arca filing Form 19b-4 alongside Grayscale’s Form S-3 submission. If approved, Ethereum Trust shares would trade under the symbol “ETHE,” with share issuance dependent on NYSE Arca’s application and Form S-3 registration.
Despite Grayscale’s proactive efforts, the SEC delayed decisions on both Grayscale and Franklin Templeton’s applications, citing the need for additional time to evaluate proposed rule changes and related issues, setting deadlines for June 23 and June 11, respectively.
The delay has stirred speculation and sentiment in the industry, with concerns raised about the lack of engagement from SEC staff, hinting at a potential denial. While some remain optimistic, drawing parallels between Ethereum and Bitcoin ETF scenarios, others are less hopeful.
There are unresolved concerns about Ethereum’s staking feature, with critics suggesting these complexities could impede approval. Additionally, speculation surrounds SEC Chairman Gary Gensler’s stance, leading some to believe he may not approve Spot Ethereum ETFs, potentially prompting Grayscale to pursue legal action, akin to the battle over Spot Bitcoin ETFs.
JP Morgan analysts estimate the likelihood of a Spot Ethereum ETF approval by the May deadline to be less than 50%. This cautious approach reflects the SEC’s commitment to a detailed review of submitted materials to safeguard investor interests.
While Bitcoin ETFs are already present in American markets, Ethereum counterparts are awaiting their turn. The SEC’s decision, whether positive or negative, will significantly impact the cryptocurrency industry and the accessibility of digital assets to the general public.
Hot Take
The wait continues as the SEC deliberates on Spot Ethereum ETF approvals, impacting the crypto industry’s direction and access to digital assets. Stay tuned for further developments as the regulatory landscape evolves.
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