Ethereum spot ETF is coming! The SEC gives the exchange the green light

Wallstreetcn
2024.05.23 22:45
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The approval by the U.S. Securities and Exchange Commission this time does not mean that the Ethereum ETF has been fully approved. What was approved on Thursday was the 19b-4s filing, and the issuer's S-1 registration statement still needs to be approved before the issuer can officially launch the Ethereum spot ETF

After more than four months since the listing of Bitcoin spot ETF, the cryptocurrency market will witness another milestone event: the second largest cryptocurrency Ethereum, following Bitcoin, will also have a spot ETF listed for trading.

After the U.S. stock market closed on Thursday, May 23, Eastern Time, the U.S. Securities and Exchange Commission (SEC) announced the approval of the Ethereum spot ETF trading plans submitted by the New York Stock Exchange, the Chicago Board Options Exchange (CBOE), and Nasdaq. This means that amidst speculations of whether it would be listed this week or possibly in the coming months, the U.S. regulatory authorities have given the green light to exchanges interested in trading Ethereum spot ETFs, paving the way for Ethereum ETF to be listed for trading in the U.S.

The approval by the SEC this time does not mean that the Ethereum ETF has been fully approved. The approval on Thursday was for the exchanges seeking to modify the rules to allow Ethereum ETF to be listed, which is the 19b-4s filing. Before the ETF is officially listed, the issuer of the ETF needs to obtain SEC approval for the specific ETF listing plan, known as the S-1 registration statement.

According to the process, the SEC must approve the 19b-4s and S-1 registration statement before the issuer can officially launch the ETF product. Generally, funds listed for trading come with an S-1 registration statement, which details how the fund operates and discloses risks and costs.

The SEC has not provided any feedback on another key document, the S-1 registration statement. Unlike the 19b-4 filing, there is no deadline for the SEC to respond to the S-1. Therefore, theoretically, the SEC could indefinitely delay the listing of the ETF.

Nevertheless, some media outlets believe that the SEC's approval on Thursday brought a big surprise to companies hoping to launch Ethereum ETFs and the entire cryptocurrency industry. Just this Monday, it was reported by industry insiders that recent meetings between the ETF issuers and the SEC sent negative signals, with a one-sided feeling in the meetings, and SEC staff did not discuss the substantive details of the ETF products.

However, the news that SEC officials requested exchanges to submit applications by this Tuesday at the latest has boosted confidence in the cryptocurrency circle and Wall Street for the approval of the ETF.

Since last year, nine issuers have submitted 19b-4 filings to the SEC for Ethereum spot ETF applications, and the SEC has repeatedly postponed making relevant decisions. Five issuers have recently responded to the SEC's request by updating the 19b-4 filings. Among them, Fidelity, Franklin Templeton, ARK Invest, and 21Shares have removed the ETH collateral clause, which has been the main reason for the SEC's hesitation towards Ethereum ETF.

Subsequently, industry analysts believe that the probability of approval for the Ethereum ETF has significantly increased from 25% to 75%.

Due to concerns about market manipulation, it took the SEC more than ten years to approve the Bitcoin spot ETF. If the approval of the Bitcoin ETF was considered a milestone towards mainstream adoption of Bitcoin, then the approval of the Ethereum ETF would be a milestone for the entire cryptocurrency industry. Recent comments suggest that if the approval of the Bitcoin ETF marked a milestone for Bitcoin's mainstream adoption, then the approval of the Ethereum ETF would be a milestone for the entire cryptocurrency industry CF Benchmarks CEO Sui Chung believes that Ethereum is more complex than Bitcoin, and the SEC may need several months to review the relevant documents. However, as the Bitcoin ETF has provided an established template, the SEC can only take it slow.

After the SEC approved the relevant exchange documents on Thursday, the intraday trading price of Ethereum (ETH), which had already turned lower, quickly turned higher, approaching $3,890 at one point. The 24-hour increase expanded to over 1%, but still did not reach the high point above $3,940 that was broken during European stock trading on Thursday, March 14.

Ethereum intraday broke through $3,940 to set a new high for more than two months, then turned lower. After the U.S. Securities and Exchange Commission approved the exchange's related document application, it quickly turned higher.

Regarding the impact of the listing of Ethereum spot ETF on the market, Wall Street News mentioned this week that industry insiders believe the launch of Ethereum ETF may lead to a surge in market demand, resulting in a tight supply of Ether.

In a situation of tight supply, the price of Ether may become more sensitive to fund inflows, and locked Ether cannot be used to meet the additional demand of the ETF, further causing a supply shortage and driving up the price of Ethereum. Therefore, the listing of Ethereum ETF may indicate a key "turning point" before the surge in cryptocurrency prices.

Some analysts also believe that the launch of Ethereum ETF may trigger "internal competition" in the industry, which could have a negative impact on spot Bitcoin ETFs and Bitcoin itself, as market funds may shift from Bitcoin ETFs to Ethereum ETFs

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