Analysts anticipate the launch of spot Ethereum ETFs within weeks, following significant amendments to filings by issuers like Fidelity and Ark 21Shares.
Though US Security and Exchange Commission (SEC) approval remains uncertain, these developments could mark a pivotal moment for the crypto market.
SEC Filings Amended, Paving Way for Potential Ethereum ETF Launch
The SEC recently requested amendments to the 19b-4 forms filed by asset managers for spot Ethereum ETFs. Five potential issuers—Fidelity, ARK 21Shares, Invesco Galaxy, VanEck, and Franklin Templeton—have complied and made the necessary changes through Cboe. They removed language related to staking and added clear statements that the funds cannot be staked by anyone.
“Neither the Trust or the Fund, nor the Sponsor, nor the Custodian, nor any other person associated with the Trust or Fund will, directly or indirectly, engage in action where any portion of the Fund’s ETH becomes subject to the Ethereum proof-of-stake validation or is used to earn additional ETH or generate income or other earnings,” the amended documents read.
The Depository Trust & Clearing Corporation’s (DTCC) website has also featured VanEck’s proposed spot Ethereum ETF with ticker ETHV. Despite these positive developments, SEC approval is not guaranteed.
Read more: Ethereum ETF Explained: What It Is and How It Works
“Need to actually see SEC approval orders on all the 19b-4s and then we need to see S-1 approvals,” James Seyffart, ETF analyst at Bloomberg Intelligence, said.
The 19b-4 filings propose rule changes necessary for listing new products on stock exchanges, such as spot Bitcoin or Ethereum ETFs. Meanwhile, S-1 registration forms provide detailed information about new securities offered to the public, including the fund’s structure, management, and investment strategy. Issuers must obtain approval for both forms to launch ETFs in the market officially.
Nonetheless, Seyffart expressed optimism after seeing this progress. He stated it “could be weeks or more before [Ethereum] ETFs launch.” Despite his optimism, Seyffart affirmed that his approval odds are still the same, at 75%.
Many see the approval of spot Ethereum ETFs as a bullish signal for the broader crypto market. However, approving these ETFs without allowing staking might disadvantage investors seeking additional yield from staking rewards.
Investors who buy, hold, and stake ETH can earn staking rewards, which provide extra yield. In contrast, spot Ethereum ETFs without staking provide exposure to ETH prices but lack the benefits of staking rewards.
According to a recent report, the same reason led asset managers CoinShares and Valkyrie to decide not to apply for spot Ethereum ETFs. A source familiar with the matter said that the firms don’t see value for investors without the staking aspect.
Industry experts believe that political considerations could influence the approval of spot Ethereum ETFs. This is especially relevant to the upcoming US presidential election in November. BeInCrypto reported that several experts agree the approval might signal a shift in President Joe Biden’s administration’s stance on crypto.
Read more: How to Invest in Ethereum ETFs?
Recently, Emilie Choi, President and Chief Operating Officer (COO) at Coinbase, also noticed the swift change in SEC’s stance.
“And the sense is that the tone from the SEC has just changed literally overnight based on some feedback, it must have gotten from just seeing the [Staff Accounting Bulletin No. 121] SAB 121 repeal and probably the administration seeing sensing some panic, I guess,” Choi said during the JPMorgan Technology, Media & Communications Conference 2024.
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