SEC’s 2nd Massive Delay Disrupts Market

Issuers of prospective spot Ethereum exchange-traded funds (ETFs) are still in limbo, waiting for the Securities and Exchange Commission (SEC) to provide feedback on their S-1 filings. According to two sources, these drafts were initially submitted on May 31, with the issuers anticipating comments from the SEC by June 7. Yet, at least two issuers have reported receiving no feedback as of now. One source mentioned that they now expect the SEC’s comments to arrive later this week.

This delay follows a statement by SEC Chair Gary Gensler on CNBC, where he indicated that the approval process for the S-1 forms would “take some time.” The uncertainty over the timeline remains, with one source previously suggesting that the S-1 forms might need at least two more rounds of draft filings before being ready for final approval.

Ethereum ETF Launching Process

The path to launching these spot Ethereum ETFs involves a two-step process. The initial step was the approval of the 19b-4 forms, which was completed on May 23. The current focus is on the S-1 filings, which, once approved, will pave the way for the ETFs to start trading.

The draft filings have revealed some intriguing details about the upcoming products. Notably, BlackRock is seeding its ETF with $10 million, indicating strong initial capital backing. Meanwhile, Franklin Templeton has outlined a competitive fee structure, planning to charge a 0.19% fee.

As the market eagerly awaits the launch of these spot Ethereum ETFs, a significant question lingers: Can they replicate the success of the spot Bitcoin ETFs? Bitfinex’s Head of Derivatives, Jag Kooner, offers a tempered outlook, estimating that the Ethereum ETFs will attract around 10-20% of the inflows that have been directed towards their Bitcoin counterparts.

The potential launch of these Ethereum ETFs marks a significant milestone for the cryptocurrency market, offering investors a new avenue to gain exposure to Ethereum. However, the timeline remains uncertain as issuers and investors alike wait for the SEC’s next move. The ongoing wait underscores the regulatory complexities involved in bringing innovative financial products to market, reflecting the cautious approach of the SEC in navigating the evolving landscape of digital assets.

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