CoinDesk Reports:
The anticipated launch of the U.S. Ether ETF by a cryptocurrency exchange-traded fund (ETF) on July 2 has been delayed by the U.S. Securities and Exchange Commission (SEC).
On June 29, according to The Block, the SEC returned the S-1 form to the potential Ethereum ETF issuer, accompanied by some comments, requesting that these comments be addressed and resubmitted by July 8.
Sources indicate that the return of the form does not signify the final submission. This implies that at least one more round of submissions will be required before the ETF can commence trading.
SEC Delays the Process
The SEC has provided comments on the S-1 form and requested resubmission by July 8. According to Balchunas, this new timeline suggests that the launch of the U.S. Ether ETF may be delayed until at least the latter part of July.
ETF Store President Nate Geraci noted that the previous revisions to the S-1 were relatively minor, with the expectation that the SEC would approve the issuer for trading within 14-21 days. Though the exact timeline remains uncertain, the SEC has indicated a potential launch this summer.
Earlier in early June, due to the lack of significant comments by SEC staff on the ETF applicant’s S-1 filing, Balchunas predicted an early July launch, but that now seems unlikely.
Two-Step Process for the Ether ETF
Approval of the S-1 form is the second part of the two-step process required for an ETF to go public. The first part involves the approval of the issuer’s 19b-4 form issued in May. On May 23, the SEC approved 19b-4 forms from eight ETF bidders.
Unlike the 19b-4 form, there are no specific deadlines for the S-1 form, allowing issuers to rely on the SEC’s timetable for review.
The SEC has approved a rule change allowing major issuers to participate in the process, including BlackRock, Fidelity, 21Shares, Grayscale, Franklin Templeton, VanEck, iShares, and Invesco. In addition, issuers such as VanEck have submitted Form 8-A in preparation for listing on the exchange by July 8.
While SEC Chairman Gary Gensler previously mentioned that approval of the Ether ETF could happen “at some point this summer,” no specific timeline has been provided.
Although reports suggested the ETF could potentially go public as early as July 4, it is now deemed unlikely. Issuers are unsure of the exact listing date until the SEC provides them with a final deadline for submission of the documents.
The responsibility for listing the Ether ETF lies with the applicants, with the SEC claiming the process entirely depends on their response time.
Bloomberg ETF analyst Eric Balchunas stated on the X platform, “It looks like we will have to push back the expected launch of the U.S. Ether ETF to after the holidays. I hear the SEC spent more time responding this week (though just some very minor adjustments), and from what I gather, next week will be slow due to the holiday, with the process resuming on July 8, and we’ll soon see them go live.”
SEC Chairman Gary Gensler recently stated that the earliest we might see the Ether ETF go public is in September.
Significance of the Ether ETF Listing
Galaxy Research states in a report that once the Ether ETF for spot trading is approved, monthly net inflows could reach $1 billion.
It is estimated that the net inflow volume of the first five months of an ETH ETF will be 20-50% of BTC ETF net inflows, with Galaxy targeting 30%, meaning a monthly net inflow of $1 billion.
At the same time, Galaxy warns that the demand for a spot Ether ETF may be restricted due to the lack of staking rewards.
Outflows from the Grayscale Ethereum Trust (ETHE) could also hamper inflows into the Ether ETF, with Galaxy estimating these negative outflows to amount to approximately 319,000 ETH or $1.1 billion per month.
Bitwise believes that $15 billion influx within the next 18 months would be a solid start. The institution deems ETH as a compelling asset, providing momentum to the most versatile blockchain globally. Even a $15 billion net new demand would have a substantial impact on the Ethereum market.
