The U.S. Securities and Exchange Commission (SEC) has made a surprising request to Nasdaq and CBOE to make changes to their applications for listing spot Ethereum (ETH) Exchange-Traded Funds (ETFs). This unexpected move indicates that the agency may be nearing approval of these filings, which would be a significant boost for the cryptocurrency industry as a whole.
The SEC has historically been cautious when it comes to approving crypto-related financial products, making this development particularly noteworthy. The applications submitted by Nasdaq and CBOE are the initial step in a two-step approval process.
The SEC has asked Nasdaq, CBOE, and NYSE to quickly update and modify their filings, a request that typically precedes approval, according to insiders. These stock exchange applications (19b-4s) seek SEC approval for a rule change that is necessary to list new products. However, the issuers still need the SEC to approve the ETF registration statements (S-1s) before they can begin trading.
Unlike the exchange filings, there is no specific timeframe for the SEC to make a decision on the registration statements, which means it could still take several months for the ETH ETFs to actually start trading. Market participants were expecting the SEC to reject the spot ETH ETF applications, citing discouraging and one-sided meetings with the regulator. The recent request for updates to the filings came as a surprise.
The SEC’s review process involves multiple steps, including the 19b-4 filings, which are requests made by national securities exchanges to change rules or introduce new products. Another crucial step is the S-1 registration statements, which are initial registration forms required for new securities offered to the public. These statements provide detailed information about the company’s operations to the SEC and potential investors.
Both the 19b-4s and the S-1s need to be approved by the SEC for the ETFs to be legally sold to the public. Even if the 19b-4s are approved, the SEC can still delay the approval of the S-1s, extending the review and approval process.
In terms of specific issuers, Fidelity Investments has updated its S-1 application with the SEC for a spot Ethereum ETF, choosing not to stake the underlying Ethereum tokens. Grayscale, on the other hand, has filed an updated 19b-4 for its Ethereum Mini Trust. Grayscale has stated that approving the Ethereum Mini Trust would benefit current ETHE shareholders, allowing them to maintain their exposure with a lower fee spread across both products.
Bloomberg analyst James Seyffart commented on Grayscale’s filings, noting that it may face a longer wait for approval compared to other issuers. This suggests that Grayscale may have to be patient before receiving approval.
Overall, these recent developments indicate that the SEC may be moving closer to approving spot Ethereum ETFs, which would have a significant impact on the cryptocurrency industry.
