Spot Ethereum ETFs set for SEC approval by July 4, sources confirm

The United States Securities and Exchange Commission (SEC) is reportedly close to approving spot Ethereum exchange-traded funds (ETFs), with a decision potentially arriving by July 4. 

According to a Reuters report, industry executives and participants have indicated that the approval process is in its final stages. The SEC has already approved the 19b-4 applications, but the S-1 filings are still pending approval.

A lawyer working with one of the ETF issuers stated, 

“It’s down to the finishing touches” and mentioned that approval is “probably not more than a week or two away.” 

Executives from two firms involved in the discussions have noted that only minor issues remain to be resolved in the offering documents before the ETFs can be listed and traded in the United States.

Comments from SEC Chair Gary Gensler

SEC Chair Gary Gensler recently commented on the progress of the spot Ethereum ETF approvals, stating that the process is moving “smoothly.” He emphasized that the swiftness of the approval depends on how quickly issuers implement the changes proposed by the regulator. Gensler remarked, 

“It’s really about the asset managers making the full disclosure so that those registration statements can go effective.”

Bloomberg analyst Eric Balchunas also weighed in, predicting that the approval of spot Ethereum ETFs would occur by July 2. He highlighted that recent comments from the SEC have been minimal and non-controversial, further suggesting an imminent approval.

Market Reactions and Predictions

The approval of spot Ethereum ETFs is expected to have a smaller effect on the price of Ether compared to the impact of spot Bitcoin ETFs on BTC. Analysts attribute this to the relatively smaller market share of Ethereum. 

Andrew Kang, a founder and partner at Mechanism Capital, commented on X that ETH might attract less institutional interest than Bitcoin due to the network’s less impressive cash flows. Kang suggested that the price of Ether might decline by 30% following the approval of the ETFs, questioning the potential upside unless Ethereum significantly improves its economic fundamentals.

As of the time of writing, the price of Ether stands at $3,394.68, with a market cap of $407 billion, according to CoinMarketCap data. Over the past seven days, Ether’s value has decreased by approximately 6%, and it has dropped nearly 14% in the last 30 days. However, Ether has seen an 80% increase since July 2023.

Ongoing Developments and Industry Sentiment

The potential approval of spot Ethereum ETFs comes after the SEC recently concluded its investigation into Ethereum 2.0. While the digital asset community welcomed this development, Consensys, a software development firm, indicated that the quest for regulatory clarity in the cryptocurrency space is ongoing.

Eight asset managers, including BlackRock, VanEck, Franklin Templeton, and Grayscale Investments, are seeking SEC approval for these funds. Many of these managers launched spot Bitcoin ETFs in January, following a decade-long struggle with regulators. Grayscale is also attempting to convert an existing trust into an ETF.

Executives from two of the firms involved, who requested anonymity due to the confidential nature of the discussions, mentioned that the process of amending the offering documents is nearly complete, with only minor issues left to resolve. These documents must be approved before the ETFs can be launched.

James Butterfill, head of research at CoinShares, noted that launching spot Ethereum ETFs might not generate the same level of interest as Bitcoin ETFs due to Ethereum’s smaller market cap and trading volumes. 

Bryan Armour, an ETF analyst at Morningstar, echoed this sentiment, stating, 

“With Bitcoin, there had been pent-up demand for a decade and investor interest was off the charts. This just isn’t going to command the same excitement.”