Spot Ether ETFs Set for Possible Mid-June Launch After SEC Approval

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In a landmark decision, the United States Securities and Exchange Commission (SEC) has given the green light for spot Ether (ETH) exchange-traded funds (ETFs) to proceed, with potential launches as early as mid-June. This approval, announced on May 23, follows the SEC’s regulatory pathway similar to that of spot Bitcoin ETFs earlier this year.

The SEC has approved the 19b-4 filings from eight major asset managers, including VanEck, BlackRock, Fidelity, Grayscale, Franklin Templeton, ARK 21Shares, Bitwise, and Invesco Galaxy. 

These approvals permit the listing and trading of spot Ether ETFs on their respective exchanges. However, the actual trading of these ETFs will only commence once the applicants receive SEC approval for their S-1 registration statements.

Approval of S-1 Forms Soon

According to Bloomberg ETF analyst James Seyffart, the approval of S-1 forms could occur within a “couple of weeks,” although the process can traditionally extend up to five months.

Fellow Bloomberg analyst Eric Balchunas added that a mid-June launch is “certainly possible,” citing the precedent set by the SEC’s handling of spot Bitcoin ETFs, where the feedback process took around two weeks.

Balchunas anticipates only one round of comments on the S-1 amendments, akin to the feedback provided for spot Bitcoin ETF applicants. He estimates a mid-June launch based on this timeline, though he emphasized this is speculative: “Just a guess tho. We will see.”

20% of Inflows from Spot BTC ETFs to Spot Ether ETFs

VanEck quickly filed its amended S-1 following the approval of its 19b-4, with other applicants expected to follow soon. However, Gabriel Shapiro, general counsel at Delphi Labs, noted that the SEC’s approval was made by its Division of Trading and Markets unit on a “delegated authority.” This means one of the five SEC Commissioners could theoretically challenge the decision within the next 10 days.

If the S-1 forms are signed off as expected, Seyffart predicts that spot Ether ETFs will attract 20% of the inflows seen by spot Bitcoin ETFs, while Balchunas estimates a slightly lower range of 10-15%. 

According to Farside Investors, spot Bitcoin ETFs have amassed $13.3 billion in net inflows since their launch approximately four and a half months ago. Capturing 20% of that figure would mean spot Ether ETFs could see a combined $2.66 billion in inflows over a similar period.

Outflows from Grayscale Spot Ether ETF

There are concerns, however, that the spot Ether ETF market might experience significant outflows from the Grayscale Ethereum Trust, similar to the outflows observed with Grayscale’s converted Bitcoin investment product. Currently, more than $11.3 billion is locked in the Grayscale Ethereum Trust, as per data from Arkham Intelligence.

The SEC’s decision marks a significant step forward for cryptocurrency investment products, following its earlier approval of spot Bitcoin ETFs in January. The approval of spot Ether ETFs is expected to further integrate digital assets into mainstream financial markets, offering a more stable and regulated investment vehicle for Ether.

On May 23, eight major applicants received regulatory approval, while Hashdex was the only ETF issuer whose application was not approved. As the industry waits for the final S-1 approvals, the potential mid-June launch of these ETFs could mark another pivotal moment in the evolution of digital asset investment.

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