In a second landmark decision this year, the United States Securities and Exchange Commission (SEC) has given the regulatory green light to spot Ether exchange-traded funds (ETFs) in the United States and on May 23, the SEC approved the 19b-4 filings from VanEck, BlackRock, Fidelity, Grayscale, Franklin Templeton, ARK 21Shares, Invesco Galaxy, and Bitwise. Allowing these spot Ether ETFs to be listed and traded on their respective exchanges. The landmark decision came despite speculation that the SEC was investigating whether to label Ether (ETH) as a security. While the 19b-4s have been approved, ETF issuers still need the SEC to sign off on their respective S-1 registration statements for the spot Ether ETFs to begin trading officially. Industry analysts say this could take days, weeks, or even months. The SEC reportedly instructed applicants to accelerate their 19b-4 filings on May 20. The removal of staking is the most notable amendment seen across several filings. The SEC's approval of applications by various exchanges to list $ETH ETFs constitutes a declaration by the SEC that ETH is a COMMODITY. This is so because the ETFs are "commodity-based trusts." There are many second order effects flowing from this decision that could impact… — MetaLawMan (@MetaLawMan) May 23, 2024 Hashdex’s Uncertain Future The SEC did not announce approval of Hashdex’s spot Ether ETF application. The asset manager’s investment vehicle had a final deadline with the commission set for May 30 — ahead of Grayscale, Invesco Galaxy, BlackRock, and Fidelity. It’s unclear whether the SEC will ultimately approve Hashdex’s ETF. The SEC approval comes a day after the United States House of Representatives members voted in favour of legislation many believe will provide more regulatory clarity to the cryptocurrency industry. The Financial Innovation and Technology for the 21st Century Act will clarify the roles of the SEC and Commodity Futures Trading Commission. However, it still needs to be passed by the Senate and signed into law. The spot Ether ETF approval comes four and a half months after the SEC approved several spot Bitcoin ETF applications on Jan. 10, marking an industry first. The price of ETH rose to more than ,900 immediately following the SEC announcement, then dropped to ,759 at the time of publication. Ethereum ETF Approved: Why No Price Surge? alpha on why ETH isn't mooning: –>only 19b-4s approved, not S-1s –>approval was by division of trading/markets on 'delegated authority' –>means a commissioner can challenge in next 10 days (also means they are trying to hide the vote b/c it's political) what's really going… — _gabrielShapir0 (@lex_node) May 23, 2024 Crypto commentators suggest there could be two reasons why the price of Ether has barely moved despite the landmark approval of spot Ether exchange-traded funds (ETFs) in the United States. Crypto commentator Zach Rynes argues that the lack of movement reflects the notion that “everyone who wanted to buy the approval already did.” Ether had surged 29% over the past week after reports suggested the SEC may have pivoted its stance toward ETF approvals. Rynes and many others also note that while the ETFs have been approved, they still haven’t been cleared to launch. That will require an approved S-1 filing, a comprehensive document including details on the firm’s financials and risk profile, as well as the securities they intend to offer. Concerns Over Grayscale’s Plans There are also lingering concerns that Grayscale’s announcement of its plans to convert its Grayscale Ethereum Trust (ETHE) into a spot Ether ETF could result in significant outflows — similar to Grayscale Bitcoin Trust (GBTC) after the approval of spot Bitcoin ETFs in January. “Grayscale also re-filed the ETHE registration they’d withdrawn. Remember GBTC outflows? Now it’s B+ ETH that’s been trapped for seven sevenears,” pseudonymous crypto trader Rho Rider warned in a May 23 X post. SEC’s ETF Decision and the Status of Ether This is a key point. The reason the approval of the spot ETH ETFs is a clear indication that the SEC does not consider ETH a security is because funds whose assets are 40% or more securities may not register through a Form S-1; rather, they are considered investment companies and… https://t.co/Q2MkMsrqNg — TuongVy Le (@TuongvyLe12) May 23, 2024 The approval of spot Ether exchange-traded funds is “implicit recognition” from the United States Securities and Exchange Commission (SEC) that Ether is not a security, according to industry pundits. One even suggests this could extend to other tokens as well. “These are commodities-based trust shares, so the SEC, by approving these, is explicitly saying they’re not going to go after Ether as a security,” stated Bloomberg ETF analyst James Seyffart in a discussion with Ryan Sean Adams on the Bankless podcast. Digital Asset Lawyer Justin Browder believes if Ether ETFs get S-1 approval — the final piece needed for them to start trading — then the “debate is over: ETH is not a security.” Adam Cochran, Managing Partner at venture capital firm Cinneamhain Ventures, went one step further, arguing that this approach could extend to other projects’ tokens: “ETH is a commodity, even with its current attributes. That means we can extrapolate to A LOT of other projects what elements matter in security. Today, many things probably clearly became commodities, even if they don’t know it yet.” However, Seyffart and others believe the SEC could continue to pursue actors involved with staking Ether (ETH): “[I think they will] try to thread this needle and say ETH itself, they’re not going to call a security but staked ETH might be a security […] and I don’t believe they’re going to give that up any time soon.” VanEck’s Ethereum ETF Ad Campaign Asset manager VanEck was quick to celebrate its newly-approved spot Ether (ETH) exchange-traded fund (ETF) with an arty 37-second advertisement coaxing viewers to “Enter the ether.” enter the ether
