SEC approves Ethereum ETF’s, what are the next steps?

Although the outlook initially appeared bleak, the American Securities and Exchange Commission (SEC) ultimately approved all eight applications for Ethereum (ETH) exchange-traded funds (ETFs). The approved applications came from prominent asset managers including BlackRock, Grayscale, VanEck, Ark Invest, 21Shares, Bitwise, Fidelity, Invesco Galaxy, and Franklin Templeton.

The SEC’s official filing indicates that the proposals comply with the Exchange Act and relevant national securities exchange regulations. Specifically, they align with Section 6(b)(5), which emphasizes fraud prevention, investor protection, and safeguarding the public interest.

The exchanges hosting the ETFs made amendments to their filings earlier in the week, leading to the SEC’s expedited approval before the usual 30-day notice period. This swift approval reflects the SEC’s confidence in the accuracy and reliability of the exchanges’ representations and descriptions.

Impact on crypto regulation

The SEC’s approval of Ethereum ETFs suggests a recognition of Ethereum’s market maturity and its compliance with necessary regulatory standards. The SEC’s decision could potentially influence its regulatory stance on the cryptocurrency, particularly its classification as a commodity. This classification was a significant factor in the earlier approval of Bitcoin (BTC) ETFs.

SEC Chair Gary Gensler had previously indicated that, except for Bitcoin, other cryptocurrencies are considered commodities based on the Howey test. However, experts suggest that the regulatory framework needs updating to better address the specifics of the crypto market.

Approval next steps

The eventual launch of the recently approved Ethereum ETFs largely depends on the speed at which S-1 registrations are approved and the amount of feedback rounds the applicants will receive from the SEC.

The SEC approved the 19b-4 documents, allowing applicants to list their funds on exchanges. However, trading can only begin once their S-1 registrations are also approved. This approval could come within a few weeks, though the process typically takes about five months. The speed of this review will depend on the SEC’s assessment and any necessary amendments.

The SEC may provide feedback or require amendments to the S-1 filings. However, this process could be quicker than expected, with potentially only one round of comments, similar to the process for the Spot Bitcoin ETFs. Upon receiving final approval, the ETFs can be listed on the designated exchanges. 


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