SEC Reviews Spot Ether ETF Application from ProShares, Initial Launch May Be Delayed
Highlights:
- The SEC is currently evaluating ProShares’ spot Ethereum ETF filing submitted to NYSE Arca, with a 21-day public comment period.
- ProShares’ Ethereum ETF launch may be delayed longer than its competitor ETH ETFs, James Seifert said.
- Ether ETFs could capture between 10-20% of the flows currently directed towards BTC ETFs, Bitfinex’s head of derivatives said.
The United States Securities and Exchange Commission (SEC) has added a spot Ethereum Exchange Traded Fund (ETF) application from investment firm ProShares. This comes nearly three weeks after the SEC approved spot Ether ETFs from eight asset managers.
According to the report, the New York Stock Exchange (NYSE) Arca had filed a proposed rule change enabling it to list and trade shares of the ProShares ETH ETF. However, the SEC’s publication of the filing doesn’t indicate approval yet; it kicks off the formal review process. The SEC stated that there will be a 21-day period for the public to provide comments on the proposed ETF. Following this, SEC officials will have 45 days to either approve, reject, or extend their review of the application.
NEW: 🇺🇸 SEC just added the Ethereum ETF filing by ProShares to its website.
🫡 @JSeyff pic.twitter.com/bi7yef9S7U
— Radar🚨 (@RadarHits) June 10, 2024
If approved, ProShares ETH ETF would directly track the price of Ether itself. Investors could purchase shares to gain exposure to Ethereum’s price without needing to directly buy and hold the cryptocurrency, which can be complex. Furthermore, ProShares intends to have Coinbase Custody Trust Company hold the actual Ethereum backing the Ether shares. The filing was made under Form 19b-4, an important step in obtaining regulatory approval.
Spot ETH ETFs Have Yet to Launch
On May 23, the SEC officially approved 19b-4 filings from eight asset management companies seeking to list and trade spot ETH ETFs on US exchanges. These companies include VanEck, Fidelity, Grayscale, Franklin Templeton, BlackRock, ARK 21Shares, Invesco Galaxy, and Bitwise. Final approval necessitates the SEC’s endorsement of S-1 registration statements for the spot Ether ETFs before they can officially commence trading. This process could span months, although some experts anticipate it to occur sometime in July.
Bloomberg ETF analyst James Seifert believes a late June launch is a “legitimate possibility.” However, he still anticipates the odds of approval around July 4.
Good sign. Prob see rest roll in soon. Then prob one more round of fine-tune comments from Staff. End of June launch a legit possibility altho keeping my o/u date as July 4th https://t.co/WymshkTvat
— Eric Balchunas (@EricBalchunas) May 29, 2024
In a June 5 interview on CNBC, SEC Chair Gary Gensler said the next steps on the SEC’s approval of spot ETH ETFs will “take some time,” hinting at the regulator delaying or moving slowly on signing off on S-1 registration statements.
🚨NEW: @SECGov Chairman @GaryGensler says the next step in the $ETH ETF approvals “will take some time,” possibly indicating a potential slow-walk of the S-1 approval process. https://t.co/iwfN9vvmt8
— Eleanor Terrett (@EleanorTerrett) June 5, 2024
ProShares ETF Approval May Take Longer Than Competitors
“This is interesting,” commented James Seyffart regarding the filing. However, he warned that the ProShares ETF may not launch simultaneously with several other Ethereum spot ETFs. He said, “Instinct initially says [the ProShares ETF] won’t launch on day 1 with the other ETFs whenever that is but who knows.”
SEC just added the ProShares' Ethereum ETF Filing to its website. (That is extremely quick) Instinct initially says this wont launch on day 1 with the other ETFs whenever that is but who knows. This is interesting. https://t.co/VU0bYo3Gjr pic.twitter.com/npZYnljBmY
— James Seyffart (@JSeyff) June 10, 2024
Spot Ether ETFs Could Capture up to 20% of BTC ETF Flows
Bitfinex head of derivatives Jag Kooner told The Block that spot Ethereum ETFs could capture as much as a fifth of the investment flows currently directed towards spot BTC ETFs. However, he believes future clarification from the SEC on whether staking will be permitted for spot Ethereum ETFs will be important.
Kooner gave a historical example of how fund managers move funds between multiple related ETFs to balance their exposure. He said the launch of gold ETFs offers a historical parallel. When new gold ETFs were introduced, they attracted significant investment, which affected inflows into existing financial products related to gold. Similarly, the introduction of Ethereum ETFs could prompt fund managers to reallocate resources. They would do this to balance their exposure to both Bitcoin and Ethereum.
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Syed Ali Haider
Syed Ali Haider is a contributing crypto writer for Crypto2Community. He is a crypto and blockchain journalist with over six years of experience. Syed Ali is a Blockchain enthusiast and writer passionate about enhancing the acceptance, adoption, and integration of Blockchain technology worldwide. He has also advocated for digital freedom and cybersecurity for many years. Haider has been featured in a number of high-profile crypto and finance outlets, including Coincult and more.
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