Ether ETF Approval Nears as SEC and Issuers Finalize Details

The US Securities and Exchange Commission (SEC) is nearing a decision on approving spot ether ETF applications by July 4, 2024.

(March 28): The US Securities and Exchange Commission (SEC) is nearing a decision on approving spot ether ETF applications by July 4, 2024, according to people familiar with the matter.

Eight prominent asset managers, including BlackRock Inc (BLK) and Grayscale Investments LLC, are seeking SEC approval for these funds, which would mark the next milestone in the asset class's regulatory journey following the launch of bitcoin ETFs earlier this year, Reuters reported.

Grayscale, the world's largest digital asset manager, is again seeking to convert an existing trust into an ETF. Executives from two firms told Reuters that finalizing the ETF offering documents is almost complete, with only minor issues left to resolve before launch.

Ether ETF Approval Nears as SEC and Issuers Finalize Details

Approval for ether ETFs is expected within “a week or two,” according to a lawyer working closely with one of the issuers, who spoke anonymously. The Securities and Exchange Commission (SEC) is finalizing the launch timeline based on how quickly issuers address regulatory queries, as SEC Chairman Gary Gensler highlighted in recent statements.

After being delayed for years, ETFs tracking the spot price of bitcoin saw a successful launch in January, amassing about $8 billion in assets, according to Morningstar Direct. As of late June, these bitcoin ETFs held a combined total of nearly $38 billion. Grayscale Bitcoin Trust saw its assets decrease to $17.8 billion after converting to an ETF.

Analysts caution that the impact of new ether ETF offerings may be less significant compared to bitcoin, citing disparities in market size and trading volumes. Notably, ether has faced an 11.1% price decline recently, following a 9.8% drop in bitcoin, which tends to influence ether's market movements in the absence of unique price drivers.

James Butterfill from Coinshares and Bryan Armour from Morningstar anticipate more restrained investor interest in ether ETFs than their bitcoin counterparts, primarily due to these market dynamics.

Ethereum Notes Longest Inflationary Period

Since completing its proof-of-stake (PoS) transition in September 2022, Ethereum has encountered an inflationary phase, adding more than 112,000 ether to the network's supply since mid-April. This marks the longest period of ether inflation since the network shifted to a block subsidy model in 2015.

Concurrently, gas fees on the Ethereum network have dropped to their lowest levels over four years, hitting 1.9 gwei on June 22. Increased competition for block space is driving down transaction costs, making the network more accessible.

In related news, the Securities and Futures Commission (SFC) in Hong Kong is engaged in discussions with ether ETF issuers regarding the inclusion of ether staking features in these products, according to two sources with direct knowledge of the matter.