SEC Approves Spot Ether ETF Listing

SEC approved spot Ether ETF Listing; Ether rises 14% to $3,790 on optimism.

TakeAway Points:

  • The SEC approved 19b-4 forms for spot ether ETFs prior to S-1 form clearance and market trading.
  • Fidelity, VanEck, Franklin Templeton, Ark/21Shares, Invesco/Galaxy, BlackRock, and Grayscale are possible issuers.
  • The time between the final S-1 approvals and the commencement of ETF trading is expected to be several weeks or months.

Approval Speculation for Ether ETFs

As the US Securities and Exchange Commission (SEC) seems to be getting closer to allowing exchange-traded funds (ETFs) that invest directly in Ether, the second-largest cryptocurrency by market capitalization, the cryptocurrency market is currently booming with excitement. 

Bloomberg News reported on May 21 that the SEC had lately been in touch with exchanges that have spot Ether ETF filings, which sparked a change in public opinion. Major fund companies, including ARK 21Shares, Fidelity Investments, Invesco Ltd., Franklin Resources Inc., and VanEck, have filed a plethora of documents in response to this event.

Prior to the SEC’s approval of spot-Bitcoin ETFs in January, a number of fund companies had expected to be rejected because of less upbeat private conversations. But the latest outreach from the SEC has drastically changed expectations.

 “A week ago I would have thought you were a little crazy to believe that these ETFs were going to gain SEC approval,” said Bloomberg Intelligence ETF analyst James Seyffart. 

If spot-Ether ETFs are approved, regular investors will be able to trade Ether more easily, much as spot-Bitcoin ETFs.

The Market Impact of Ether

The market has already been greatly impacted by the possible acceptance of spot-Ether ETFs. At its highest increase since November 2022, ether jumped about 14% on Monday. As of press time, CoinGecko shows that ether was trading at $3,790. 

This is a 3.8% rise in the last day and keeps the price $600 higher than Monday, when hopes for an acceptance of an ETF initially arose. Gains were also seen in bitcoin, which is moving closer to $72,000 and its all-time high of about $74,000 from mid-March.

The SEC has sought updates to the 19b-4 disclosures from exchanges including Cboe Global Markets and the New York Stock Exchange, and this is positive. However, this does not guarantee approval. 

Issuers still have to get over technical challenges like S-1 registration statements and risk disclosures. The SEC has until May 23 to decide whether to accept or reject VanEck’s request for a spot-Ether ETF.

“There is likely to be a gap before we see S-1 approvals and these ETFs begin trading. My guess is that this will take at least a week, but likely more. If history is any guide, it could be much longer and measured in months. But I personally think the gap will be measured in weeks. Everyone is just guessing right now, though.” Seyffart added.

Importance of ETFs with Spot Ethereum

Spot-Ether ETFs, akin to the spot-Bitcoin ETFs authorised earlier this year, would revolutionise the cryptocurrency market. These exchange-traded funds (ETFs) would let investors invest in Ether without having to deal with the hassles of actually purchasing and storing the cryptocurrency. On a public market, investors might purchase shares of the ETF instead, which would follow changes in Ether’s spot price.

Spot-Ether ETFs could be well-liked by individual investors based on the performance of spot-Bitcoin ETFs, which have drawn net inflows of about $13 billion since their inception. Banks, hedge funds, and pension funds, among other investor groups, would probably participate in the market more if these ETFs were approved. 

Stakeholders of the possible ETFs, such as Fidelity and Grayscale, had wanted to stake them, but it looks like the SEC would not allow this. On Tuesday, the two asset managers submitted revised S-1 registration statements that did away with the mention of staking.

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