Filings Updated as Spot Ethereum ETF Deadline Nears

Filings Updated as Spot Ethereum ETF Deadline Nears

The SEC is due to decide on the first spot Ethereum ETF on Thursday.

ETF.com
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Contributing Editor
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Reviewed by: etf.com Staff
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Edited by: Ron Day

Exchanges on which spot Ethereum exchange traded funds would be listed have amended their SEC applications for rules changes that address regulators' concerns and potentially allow the new products to begin trading. 

On Wednesday, the Nasdaq submitted an updated 19b-4 form for BlackRock's iShares Spot Ethereum ETF. The filing followed a day after CBOE submitted amended 19b-4s for funds proposed by Franklin Templeton, Fidelity, VanEck and Invesco Galaxy. 

The amended applications eliminate staking rewards, a high-risk strategy in which investors use ether—the native cryptocurrency of the Ethereum network—as collateral to validate transactions on the blockchain. On Tuesday, Fidelity and Grayscale updated S-1 registration statements that are part of a two-part approval process to remove staking. 

The flurry of activity comes just a day before the SEC is scheduled to decide on an application by ETF giant VanEck and two days before it rules on an Ark/21 Shares investment proposal. 

The SEC had been widely expected to reject both applications, which depend primarily on the ongoing price of ether, the second largest digital asset behind bitcoin in market value.

The agency had been concerned that spot Ethereum ETFs are vulnerable to market manipulation and fraud, which agency Chairman Gary Gensler has argued plage digital assets, and which presented an obstacle before the Jan. 10 approval of 10 spot bitcoin ETFs (an 11th fund subsequently started trading in March). 

But those funds have generated almost $13 billion in inflows in slightly more than four months and the political winds have also apparently been shifting as Democrats, who have been more skeptical of digital assets, recognizing along with Republicans that crypto investors represent an increasingly large block of voters. 

White House Softens

On Wednesday, the White House said that it opposed a House of Representatives bill—so-called FIT21—that would reformulate how issuers of securities must comply with federal law and Supreme Court precedent, but it notably did not threaten to veto it. Earlier this month, the Senate and House passed legislation that overturned new SEC accounting guidance on cryptocurrencies. 

Ether was down slightly at about $3,750 early Wednesday afternoon after soaring more than 25% over the past week, according to cryptocurrency market data provider CoinMarketCap. Most of those gains occurred as the likelihood of spot Ethereum ETF approvals soared. Meanwhile, Ether open futures interest jumped 25% to $14 billion over a 24-hour period beginning Tuesday, according to Coinglass. 

The SEC must approve the 19b-4s and S-1 registration statement for the ETFs to start trading, with the latter usually a formality. 

In a Twitter Spaces event on Wednesday, Van Eck Head of Digital Assets Research Matthew Sigel said that the firm expected to be "first out the door."

"When you filed used to mean something and it should again vs SEC allowing everyone out on the same day which favors the big firms," he said.

 

  

 

James Rubin is a contributing editor for etf.com, where he produces the Morning Exchange and Weekly Exchange newsletters. A longtime financial writer, editor and book author, he formerly held positions as a news and markets editor for the Americas at CoinDesk, where he focussed on cryptocurrencies. 

He provided editorial guidance for a Wall Street Journal best-selling book on Bitcoin and oversaw a startup newsroom focused on digital financial assets. He has edited for TheStreet and Unchained, where he wrote daily news stories about the trial of fallen crypto entrepreneur Sam Bankman-Fried. His writing has also appeared in The Hollywood Reporter, Forbes.com, AdWeek, Bankrate, The Financial Brand and The Wall Street Journal. He has also written for Forbes Insights and the Economist Intelligence Unit, including papers presented at World Economic Forums in Davos and Mumbai. 

James is the co-author of The Urban Cyclist’s Survival Guide (Triumph Books) and has been interviewed about bike safety on a number of NPR affiliates. In a prior career, Rubin was a world-ranked tennis player, once competing in Wimbledon’s qualifying rounds. He speaks fluent German and is a graduate of the Columbia University Graduate School of Journalism and received his BA at Columbia University.