Ethereum Spot ETF Approval Depends on the Issuer
6/8/20242 min read
Approval of a spot Ethereum Exchange-Traded Fund (ETF) in the US depends on how quickly the issuer responds to comments from the Securities and Exchange Commission (SEC), according to Chairman Gary Gensler.
This statement places the onus of the approval process on the issuer, indicating that the SEC will not drag out this process as some previously feared.
On May 23, the SEC approved eight 19b-4 filings to list spot Ethereum ETFs on various US exchanges. However, these ETFs cannot begin trading until they obtain the required S-1 registration statement approval. Gensler emphasized that registrants' responsiveness to SEC comments is critical.
“These registrants are independently motivated to respond to the comments they receive, but it all depends on how responsive they are,” said Gensler, as reported by Cointelegraph.
His comments provided clarity following his appearance on CNBC a day earlier, where he mentioned that the next steps would take time. This has fueled speculation that the SEC may take a long time to approve Form S-1. Bloomberg ETF analyst Eric Balchunas previously noted that this process could take several weeks or months, but now he suggests that the first week of July may be a realistic timeline for first approval.
Grayscale Challenges Influence SEC's Ethereum ETF Decision
The SEC has not explained its apparent change in stance on Ether spot ETFs, which came days before the first decision deadline. However, Gensler hinted to Reuters that the change may have been influenced by Grayscale's legal challenge regarding a Bitcoin ETF last year.
Grayscale successfully argued in court that if the SEC approves a Bitcoin futures ETF, there is no reason to reject a spot Bitcoin ETF. This argument was crucial in their eventual agreement.
Gensler acknowledged that Ethereum's case has similarities to Bitcoin, noting that SEC staff examined the correlation between the two.
“The correlation is relatively similar to the correlation in the Bitcoin space,” he said.
Alternative Theory: Influence of SEC Commissioners Linked to Pelosi
Bloomberg ETF analyst James Seyffart, previously skeptical about Ether ETF approval, offered an alternative theory. He suggested that SEC Commissioner Jamie Lizárraga, who has ties to influential Democrat Nancy Pelosi, may have played a role in the decision.
Seyffart shared this perspective in the Bits+Bips podcast with Unchained, highlighting Lizárraga's long history of working with Pelosi.
“What I'm hearing from other people is that this could come from Lizárraga, who spent a very long time working, she used to be Nancy Pelosi's right-hand man,” Seyffart explained.
He also noted that there is significant concern among Democrats in the Senate and House regarding crypto polling and the number of people who own crypto.
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