The discussion surrounding the potential approval of Ethereum exchange-traded funds (ETFs) is gaining momentum due to the recent request from the Securities and Exchange Commission (SEC) to expedite the updating of 19B-4 filings for these ETFs. Bloomberg analyst Eric Balchunas and colleague James Seyffart have adjusted their odds of approval from 25% to a more optimistic 75%, reflecting a potential shift in the SEC’s cryptocurrency regulatory approach influenced by politics and recent developments within the agency.
This week, the SEC is faced with an important decision deadline regarding both the 19b-4 filings and the S-1 registration statements. The 19b-4 filings pertain to changes in exchange rules necessary for listing new products like Ethereum ETFs, while the S-1 registration statements provide detailed information about the ETF’s structure, management, and strategy to replicate Ethereum’s performance. While it is possible for the SEC to approve the 19b-4s, they may choose to delay the S-1s.
The SEC’s review process involves evaluating the 19b-4 filings from exchanges like NYSE or Nasdaq, which seek permission to list the new Ethereum ETFs. Approval of these filings is crucial as it allows the ETFs to be added to trading platforms. However, the actual sale of these ETFs to the public depends on the approval of the S-1 registration statements. These documents are vital as they provide potential investors and the SEC with comprehensive details about the financial and operational aspects of these crypto products.
Despite the possibility of approving the 19b-4s, the SEC may slow down the approval process for the S-1s. This delay tactic, possibly due to concerns about cryptocurrency risks, gives the SEC more time to assess market conditions and the specific structures of these ETFs. Such delays are not surprising considering the SEC’s ongoing concerns about the stability and security of cryptocurrency investments. The approval of Ethereum ETFs could potentially trigger a highly-anticipated bull run in 2024, while any postponement or rejection could impact market perceptions and investor confidence, potentially favoring bearish trends temporarily.
In recent months leading up to May, the SEC has been cautious, postponing decisions and extending review periods for several Ether ETF applications. Notably, the review of Franklin Templeton’s application has been delayed until June 11, and decisions on applications from Invesco and Galaxy have also been deferred. The SEC has also extended the review period for BlackRock’s application, indicating a pattern of thorough scrutiny. The upcoming deadlines for proposals from VanEck and Grayscale later this month are particularly significant, with the investment community closely monitoring these developments.
Meanwhile, Grayscale Investments has decided to withdraw its application for an Ethereum-based spot ETF. Former CEO Michael Sonnenshein announced that the company will instead focus on converting its Ethereum trust into spot exchange-traded products.
Source: Cryptopolitan by Jai Hamid
