tl;dr
SEC Chair Gary Gensler suggests that the approval of S-1 forms for Ethereum ETFs will take time, following the recent approval of 19b-4 forms. The prolonged finalization phase may delay the ETFs from commencing trading. The SEC has instructed issuers to submit draft S-1 filings, and Gensler's commen...
SEC Chair Gary Gensler suggests that the approval of S-1 forms for Ethereum ETFs will take time, following the recent approval of 19b-4 forms. The prolonged finalization phase may delay the ETFs from commencing trading. The SEC has instructed issuers to submit draft S-1 filings, and Gensler's comments indicate a potentially slow approval process. The iterative process, expected to take several weeks or months, will involve the SEC giving feedback and prompting further changes.
In an interview on CNBC in relation to a digital assets subcommittee hearing, SEC Chairman Gary Gensler said that the further steps for the ETF approval involving Ethereum are not close at hand. This statement has been made amidst the SEC’s instructions to issuers to submit their draft S-1 filings by last Friday.
After this submission, the SEC should give its first feedback which will in turn prompt more changes to be made. From the insiders of the industry, it is expected that this iterative process may take several weeks or at most several months. This was evidenced by the fact that key financial institutions like VanEck and BlackRock filed updated S-1 forms following the approval of the 19b-4 forms on May 23. BlackRock elaborately explained that its ETF would have an initial asset of $10 million, which demonstrates the preparedness and the capital support for these strategies.
There is much excitement around the ETH ETFs, especially due to the possibility of large amounts of capital flowing into the market. As per a report from K33 Research, spot Ethereum ETFs could fetch $4 billion investments in the first five months of their launch. This estimate is derived from comparing the Bitcoin product with other BTC offerings and the increasing institutional demand seen through trading in Ethereum futures on the CME. It is anticipated that this inflow will contribute to a large part of the circulating Ethereum supply, which will further decrease the supply in the market. K33 Research also expects that the arrival of these ETFs will lead to a new all-time high in ETH prices because such products have been associated with similar market trends in the past.
Thus, the detailed review process that the SEC is currently using in its interactions with ETF issuers indicates the commission’s prudent approach to regulating these important financial instruments. The longer review period also implies detailed consideration, which might be attributed to the intricate structure of the underlying assets and the potential regulatory difficulties related to them. Companies like BlackRock have moved swiftly, indicating a strong market demand and readiness among established financial entities to embrace these new investment vehicles. Meanwhile, the withdrawal of proposals by some firms, such as Hashdex, highlights the varying levels of preparedness and strategic repositioning within the industry.