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Crypto

SEC Approves Spot Ether ETF Listing, Issuers Await S-1 Filings Approval

SEC Approves Spot Ether ETF Listing; Ether Surges 14% to $3,790 Amid Optimism

5/23, 17:25 EDT
Bitcoin / U.S. dollar
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Key Takeaway

  • The SEC approved 19b-4 forms for spot ether ETFs, a crucial step before S-1 form approvals and market trading.
  • Potential issuers include BlackRock, Fidelity, Grayscale, VanEck, Franklin Templeton, Ark/21Shares and Invesco/Galaxy.
  • Analysts predict a gap of weeks to months before final S-1 approvals and the start of ETF trading.

Ether ETF Approval Speculation

The cryptocurrency market is currently buzzing with optimism as the US Securities and Exchange Commission (SEC) appears to be moving closer to approving exchange-traded funds (ETFs) that invest directly in Ether, the second-largest cryptocurrency by market capitalization. This shift in sentiment was ignited by a Bloomberg News report on May 21, which revealed that the SEC had recently contacted exchanges with spot Ether ETF filings. This development has led to a flurry of document filings from major fund companies, including ARK 21Shares, Fidelity Investments, Invesco Ltd., Franklin Resources Inc., and VanEck.

Previously, many fund companies had anticipated a rejection from the SEC, based on less optimistic private discussions compared to those held before the approval of spot-Bitcoin ETFs in January. However, the recent SEC outreach has significantly altered expectations. James Seyffart, an ETF analyst at Bloomberg Intelligence, noted, “A week ago I would’ve said you were a little crazy to think that these ETFs were going to get SEC approval.” Approval of spot-Ether ETFs would allow retail investors to trade Ether with greater ease, similar to the convenience provided by spot-Bitcoin ETFs.

Ether's Market Impact

The potential approval of spot-Ether ETFs has already had a significant impact on the market. Ether surged almost 14% on Monday, marking its steepest advance since November 2022, and continued to rise, trading at $3,790 as of press time according to CoinGecko. This represents a 3.8% increase over the last 24 hours and maintains a $600 jump from its price on Monday before optimism for an ETF approval first resurfaced. Bitcoin also saw gains, climbing toward $72,000, nearing its mid-March all-time peak of nearly $74,000.

The SEC's request for updates to the 19b-4 filings from exchanges like the New York Stock Exchange and Cboe Global Markets is seen as a positive sign. However, this does not guarantee approval. Issuers still need to file S-1 registration statements and navigate various technical hurdles, including risk disclosures. The SEC has a May 23 deadline to approve or deny VanEck's application for a spot-Ether ETF. Seyffart added, “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 be measured in months. But I personally think the gap will be measured in weeks. Everyone is just guessing right now though.”

Significance of Spot-Ether ETFs

Spot-Ether ETFs would be a game-changer for the crypto market, much like the spot-Bitcoin ETFs approved earlier this year. These ETFs would allow investors to gain exposure to Ether without the complexities of buying and storing the cryptocurrency directly. Instead, investors could buy shares of the ETF on a public exchange, which would track the ups and downs of Ether's spot price.

The success of spot-Bitcoin ETFs, which have attracted nearly $13 billion in net inflows since their launch, suggests that spot-Ether ETFs would also be popular among retail investors. The approval of these ETFs would likely lead to increased market participation from various investor groups, including hedge funds, pension funds, and banks. However, it appears that the SEC won’t allow issuers to stake the potential ETFs, which several applicants, including Grayscale and Fidelity, had hoped to do. Both asset managers filed amended S-1 registration statements on Tuesday, removing staking from their documents.

Street Views

  • James Seyffart, Bloomberg Intelligence (Cautiously Optimistic on spot ether ETFs):

    "A week ago I would’ve said you were a little crazy to think that these ETFs were going to get SEC approval... 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 be measured in months. But I personally think the gap will be measured in weeks. Everyone is just guessing right now though."