The SEC could approve an ethereum spot ETF as soon as this week, marking a significant change in regulatory stance. Bloomberg analysts Eric Balchunas and James Seyffart have raised their approval odds to 75%, from 25%, citing recent conversations and the SEC's request for revised 19b-4 filings by x.com/EricBalchunas/status/1792692379377656074″>10 a.m. Tuesday. This rapid development has sparked a scramble among applicants, including major players such as BlackRock, Grayscale and Fidelity.
BlackRock, the world's largest asset manager, has a strong history with the SEC, having only been denied one ETF application in 2014. That ETF, the BlackRock Total Return ETF, was initially rejected due to transparency concerns. and alignment with its net asset value. (NAV). However, an updated version of this ETF, which addresses the SEC's concerns, was launched in December 2023, just a month before the approval of bitcoin ETFs. This story emphasizes BlackRock's ability to successfully navigate regulatory challenges.
The SEC's decision on ethereum ETFs has been eagerly anticipated, and deadlines for several applications are approaching. Bloomberg Terminal Data x.com/EricBalchunas/status/1792692379377656074″>shared by James Seyffart lists ETFs awaiting approval, including those from VanEck, ARK 21Shares, Hashdex, Grayscale, Invesco Galaxy, Fidelity, Franklin, and Bitwise. These applications have faced multiple delays, but recent pressure to have submissions reviewed suggests possible progress.
Grayscale and BlackRock have been proactive in updating their applications. Grayscale filed an S-3 registration statement to convert its existing ethereum Trust into a spot ETF and a ethereum-mini-trust”>S-1 for an ethereum mini ETF. BlackRock's Nasdaq amendment to its 19b-4 filing proposes cash creation and redemptions, aligning with other previously approved ethereum ETF applications and bitcoin ETFs.
The SEC's cautious approach has been influenced by concerns about market manipulation and the need for comprehensive market data on ethereum. However, the approval of bitcoin spot ETFs earlier this year, following a court victory by Grayscale, and the launch of ethereum spot ETFs in Hong Kong, have raised hopes of similar products for ethereum. The SEC's recent interactions with ETF issuers have been described as one-sided, and agency staff withheld substantial comment, raising speculation about possible rejections.
Despite these challenges, the crypto community remains optimistic: ethereum is up 17% in the last 24 hours. The approval of an ethereum spot ETF would provide a regulated and accessible way for investors to gain exposure to ethereum, which could increase market liquidity and stability. The involvement of prominent asset managers such as BlackRock and Fidelity adds credibility to these products, which could attract institutional investors and drive greater adoption of cryptocurrencies.
While not guaranteed, BlackRock's track record of overcoming regulatory hurdles and approving products suggests the odds are in its favor this week. The green light of the ethereum ETF would mark a new era for the overall integration of cryptocurrencies.
