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Friday, May 24, 2024

SEC Mostly Clears the Way For 8 Ether ETPs

News summary by MFWire's editors

Gary Gensler and his fellow commissioners have taken a step towards allowing the launch of what would be the first spot ether exchange-traded products U.S. Stay tuned for word on the final approvals need to launch each of those proposed ETPs.

Hester Peirce
U.S. Securities and Exchange Commission
Yesterday afternoon, Matt DeLesDernier, deputy secretary of the U.S. Securities and Exchange Commission (SEC), revealed that the regulatory agency has "approved on an accelerated basis" rule changes to allow three stock exchanges to list and trade shares of a total of eight proposed ETPs that would hold spot ether, the cryptocurrency associated with the Ethereum blockchain. For the ETPs to launch, the SEC would have to approve their individual S-1 registration statements; that's reportedly seen as a formality, though there is not yet an official time frame for that, and it could take "weeks to months," per comments earlier this week from Galaxy Digital research chief Alex Thorn (comments which P&I picked up).

The eight proposed spot ether ETPs in questions are:

  • The ARK 21Shares Ethereum ETF (on the Cboe BZX, no ticker revealed yet, S-1 last amended on May 10);

  • The Bitwise Ethereum ETF (on the NYSE Arca, no ticker yet, S-1 last amended on March 28);

  • The Fidelity Ethereum Fund (on the Cboe, no ticker yet, S-1 last amended on March 27);

  • The Franklin Ethereum ETF (on the Cboe, no ticker yet, S-1 last amended on February 12);

  • The Grayscale Ethereum Trust (planned as ETHE on the NYSE, S-1 last amended on April 23 and S-3 filed on the same day);

  • The Invesco Galaxy Ethereum ETF (on the Cboe, no ticker yet, S-1 filed on September 29);

  • The iShares Ethereum Trust (on the Nasdaq, no ticker yet, S-1 filed on November 15); and

  • The VanEck Ethereum Trust (planned as ETHV on the Cboe, S-1 last amended yesterday);

  • That list of ether ETP brands should look pretty familiar to many fundsters and cryptocurrency investors, as all eight proposed spot ether ETPs above are being built by firms that were among those to launch the first U.S. spot bitcoin ETPs four months ago. Those funds have since grown to about $55 billion in combined AUM.

    The Grayscale team, once again, is proposing transforming an existing fund (this one with $11.104 billion in AUM as of yesterday) into an ETP, while the folks at Ark, Bitwise, BlackRock, Fidelity, Franklin Templeton, Invesco, and VanEck are proposing to build new ETPs from scratch. Also note that, like those spot bitcoin ETPs, the proposed spot ether ETPs will be registered under the Securities Act of 1933 (not mutual funds registered under the Investment Company Act of 1940).

    Matt Hougan, chief investment officer of Bitwise, and Hunter Horsley, Bitwise's CEO, responded to the SEC's move yesterday by noting that they plan to debut their ETF ETP once the regulatory agency approves the fund's S-1. Hougan describes Ethereum as "the most exciting programmable blockchain," one that "targets a completely different use case than bitcoin."

    "Thanks to today's news, we're much closer to offering investors professionally managed exposure to ETH, the asset that fuels the Ethereum blockchain, in a format that's as familiar and easy to trade as a stock," Hougan stated. "That's exciting progress indeed."

    "We look forward to a day soon when investors can readily access one of the most dynamic assets in crypto," Horsely stated.

    Also yesterday, Matthew Siegel, head of digital assets research at VanEck, praised the SEC's move as part of trend helping "pave the way for more victories via new laws and in the courts, helping to draw investments to Bitcoin, Ethereum, and other open-source blockchain software."

    "We are so thrilled to report that the U.S. Securities and Exchange Commission (SEC) has approved, pursuant to Section 19(b) of the Securities Exchange Act of 1934, our exchange partner Chicago Board Options Exchange (CBOE)'s proposed rule change to list and trade a spot ether ETF on the CBOE," Siegel writes.

    Greg Moritz, chief operating officer and co-founder of Alt Tab Capital (a crypto hedge fund), describes the SEC's move yesterday as "a huge win for investors everywhere."

    "We see a regulatory decision that embraces progress," Moritz writes in an emailed statement. "If it is possible for ETH, what other altcoins is it possible for?"

    Aniket Ullal, head of ETF data and analytics for CFRA, writes today in a research note that the SEC's move yesterday "significantly increases the likelihood that these ETFs will launch this year, subject to issuers getting final approval from the SEC."

    "The listing of spot ETH ETFs will mark the U.S. taking the next step in making digital assets accessible to a broader universe," Ullal writes. 

    Edited by: Neil Anderson, Managing Editor

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