THE US Securities and Exchange Commission (SEC) could approve exchange-traded funds (ETFs) tied to the spot price of ether as soon as Jul 4, as talks between asset managers and regulators enter the final stages, industry executives and other participants said.
Eight asset managers, including BlackRock, VanEck, Franklin Templeton and Grayscale Investments, are seeking SEC approval for the funds. Most of them had rolled out spot bitcoin ETFs in January, the culmination of a decade-long tussle with regulators. Grayscale again hopes to convert an existing trust into an ETF.
Executives at two firms, who requested anonymity due to the confidential nature of the discussions, said the process of amending the offering documents has progressed to resolving only “minor” issues. Those documents must be approved before the ETFs can be launched.
A lawyer working with one of the issuers, who also requested anonymity, said it was “down to the finishing touches” and that approval is “probably not more than a week or two away”.
The SEC declined to comment. Earlier this month, SEC chair Gary Gensler said the launch date depends partly on how quickly issuers respond to the regulator’s queries.
The January launch of funds tracking the spot price of bitcoin was one of the most successful in the ETF market, drawing some US$8 billion in assets, Morningstar Direct data showed. As at late June, those nine new products have nearly US$38 billion in assets, although the holdings of Grayscale Bitcoin Trust – which converted its US$27 billion bitcoin trust into an ETF at the same time – dipped to US$17.8 billion.
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Many ETF and cryptocurrency analysts believe the launch of the new spot ether ETFs will be less impressive.
“Ethereum is not the same size in terms of market cap, nor does it have the same volumes,” said James Butterfill, head of research at Coinshares.
The price of ether has languished this month, falling more than 11 per cent, alongside a 9.8 per cent drop in bitcoin. Moves in bitcoin typically impact the price of ether.
Given the differences in market size and nature of the two cryptocurrencies, inflows may be much more muted when the ether ETFs launch, said Bryan Armour, an ETF analyst at Morningstar.
“With bitcoin, there had been pent-up demand for a decade and investor interest was off the charts,” he said. “This just isn’t going to command the same excitement.”
The SEC has already approved the rule changes required for the New York Stock Exchange, Nasdaq and Cboe to list and oversee trading in the new products. That means that once SEC staff sign off on the filings, the products could start trading in as little as 24 hours. REUTERS
