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The U.S. Securities and Exchange Commission (SEC) has approved eight Ethereum ETFs after a long process that many commentators thought would end in disapproval.
VanEck, Franklin, Grayscale, Fidelity, Bitwise, ARK Invest & 21Shares, BlackRock, Invesco, and Galaxy all proposed Ethereum ETFs,?and it now looks like they have a clear runway to list on exchanges like the Nasdaq.
The SEC approval document says: “After careful review, the Commission finds that the Proposals are consistent with the Exchange Act and rules and regulations thereunder applicable to a national securities exchange.
“In particular, the Commission finds that the Proposals are consistent with Section 6(b)(5) of the Exchange Act, which requires, among other things, that the Exchanges’ rules be designed to “prevent fraudulent and manipulative acts and practices” and, “in general, to protect investors and the public interest.”.”
The SEC granted approval to several spot Bitcoin ETFs in January, leading to speculation that Ethereum ETFs could potentially receive similar treatment.
However, for those wondering when spot Ethereum ETFs will begin trading, there may be a bit of a wait. The second part of the process is SEC sign-off on what is known as ‘S-1’ documents — which may be some weeks away.
As respected Bloomberg analyst James Seyffart put it:
Going to add here. Typically this process takes months. Like up to 5 months in some examples but @EricBalchunas and I think this will be at least somewhat accelerated. #Bitcoin ETFs were at least 90 days. Will know more soon.
— James Seyffart (@JSeyff) May 23, 2024
Key Takeaways
- The SEC approved the first batch of proposed Ethereum ETFs on May 23, 2024.
- VanEck, Franklin, Grayscale, Fidelity, Bitwise, ARK Invest & 21Shares, BlackRock, Invesco & Galaxy have all been approved.
Fund Companies Had Active Dialogue with SEC Before BTC ETFs
Prior to the greenlighting of Bitcoin ETFs, fund companies engaged in active dialogue with the SEC and submitted multiple amended versions of paperwork to address the SEC’s concerns.
The 19b-4s filing allows national security exchanges like the New York Stock Exchange (NYSE) or Nasdaq to list new products, such as Spot ETH ETFs. These are followed by S-1s, which are the initial registration forms required for new securities offered to the public.
SEC Chair Gary Gensler has signaled that Ethereum’s staking feature, in which users lock their tokens on the blockchain to validate transactions and earn rewards, could bring Ether under the SEC’s jurisdiction as a securities regulator.
SEC’s Decision to Offer Insight into Stance on ETH ETFs
The SEC’s decision offers some insight into its stance on spot Ethereum ETFs.
Back in January, Gensler cautioned the public that his agency’s approval of spot Bitcoin ETFs “should in no way signal the Commission’s willingness to approve listing standards for crypto asset securities.”
“Nor does the approval signal anything about the Commission’s views as to the status of other crypto assets under the federal securities laws or about the current state of non-compliance of certain crypto asset market participants with the federal securities laws,” he continued.
It is worth noting that the SEC is already under scrutiny for its anti-crypto stance. Just last month, Ethereum developer Consensys filed a lawsuit against the SEC, striking back against what the company calls the federal regulator’s “unlawful seizure of authority” over Ethereum.
The Bottom Line
The U.S. SEC, under Chair Gensler, is known for its hardball approach to the crypto industry. Over the past year, the securities watchdog has filed multiple lawsuits against prominent crypto companies and personalities, including CZ, Binance, Coinbase, Kraken, and Uniswap.
But whether this Spot ETH approval signals a softening up or simply a reluctant acknowledgment of what the market wants, the path to cryptocurrency in the mainstream continues forward for now.
