SEC greenlights Ether ETFs, but issuers must wait for final approval

The United States Securities and Exchange Commission (SEC) approved applications from major exchanges, including Nasdaq, CBOE, and the NYSE, to list spot Ether (ETH) exchange-traded funds (ETFs), but firms planning to issue the funds will still have to get approval from the regulator.

Last week, ETH ETFs took a major step toward becoming a reality after the SEC, the U.S. regulator that oversees the ETF market, approved key regulatory filings linked to the proposed product, putting ETH on track to join BTC in the ETF space.

“After careful review, the commission finds that the proposals are consistent with the Exchange Act and rules and regulations thereunder applicable to a national securities exchange. In particular, the commission finds that the proposals are consistent with Section 6(b)(5) of the Exchange Act, which requires, among other things, that the Exchanges’ rules be designed to prevent fraudulent and manipulative acts and practices and in general, to protect investors and the public interest,” the SEC’s May 24 notice said.

However, before ETH fans start popping the champagne, the products are not quite over the finish line yet. The SEC gave its blessing to so-called “19b-4 forms” tied to the ETFs, but the regulator must approve the S-1 filings from individual issuers applying to list the new products before investors can buy them.

Nine asset management firms, including VanEck, Grayscale, and BlackRock, applied to launch ETFs tied to ether following the SEC’s approval of spot Bitcoin ETFs in January.

The approval appears to be a turnaround by the digital asset skeptic regulator, whose initial lack of engagement with would-be ether ETF issuers left the market expecting a negative outcome. However, at the eleventh hour, SEC officials requested the various exchanges make quick adjustments to the filings on Monday, after which the regulator gave its unexpected stamp of approval.

In a statement, a Grayscale spokesperson praised the decision:

“At Grayscale, we appreciate the opportunity to engage constructively with regulators as they review spot Ethereum ETFs, and we remain optimistic about the potential of bringing Ethereum further into the US regulatory perimeter in the ETF wrapper.”

Meanwhile, investment management firm VanEck said of the SEC approval:

“We expect this trend will pave the way for more victories via new laws and in the courts, helping to draw investment to [BTC], Ethereum, and other open-source blockchain software. We applaud this decision.”

The SEC has not set a deadline for its final decision on the various registration statements; in the meantime, issuers will remain in limbo about when trading could commence.

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