The SEC has asked major exchanges to refine their applications to list Ether ETFs
In a significant and unexpected development, the U.S. Securities and Exchange Commission (SEC) has asked major exchanges Nasdaq, CBOE, and NYSE to refine their applications to list spot ether exchange-traded funds (ETFs), reported by Reuters. This move suggests that the SEC may be gearing up to approve these filings, a major win for the cryptocurrency industry. The news has already had a pronounced effect on the price of ether, which saw substantial gains following the announcement.
Background and Context
The SEC’s engagement with the exchanges marks the first step in a two-step approval process. Historically, the SEC has been cautious, if not outright dismissive, of cryptocurrency-related ETFs, particularly those tied to the actual asset rather than futures. However, the recent request for revisions could be indicative of a change in stance.
Ether Price Surge
Following the news, ether experienced a notable price increase, jumping 18% on Monday and climbing an additional 8.6% to reach $3,802 by late Tuesday morning. By Tuesday afternoon, ether prices had slightly retreated, stabilizing around $3,747. This price movement underscores the market’s optimism regarding the potential approval of these ETFs.
The Approval Process
The SEC’s request for Nasdaq, CBOE, and NYSE to fine-tune their filings must be completed by the end of Tuesday. This request is generally a precursor to approval, as indicated by sources familiar with the process. The exchange applications are part of a necessary rule change to list new products. However, the actual ETFs still require the SEC’s approval of their registration statements before trading can commence.
Timeline and Industry Reaction
Despite the positive signals, there is no definitive timeline for the SEC’s final decision on the registration filings. Industry experts estimate that the review process for these extensive documents could take a minimum of 60 days. Steven McClurg, head of U.S. asset management for CoinShares, emphasized the complexity of the applications, noting the hundreds of pages of disclosures involved.
Historical Context and Market Expectations
The anticipation of spot ether ETFs follows the SEC’s previous approval of ETFs tied to ether futures in October. Market participants had anticipated a rejection of the spot ether ETFs based on past interactions with the SEC. However, this recent engagement suggests a potential shift in regulatory approach.
Gary Gensler, the SEC Chair, has been known for his cautious stance on cryptocurrencies, particularly due to concerns about market manipulation. This skepticism led to a prolonged rejection of spot bitcoin ETFs, which was only overturned following a successful court challenge by Grayscale Investments. The approval of bitcoin ETFs has since drawn interest from a broad spectrum of investors, including hedge funds, wealth advisers, and retail investors. Within a week of their launch, two bitcoin ETFs managed to attract over $1 billion in assets.
Potential Impact on the Market
The approval of spot ether ETFs could be a watershed moment for the cryptocurrency industry. ETFs offer a more accessible investment vehicle for traditional investors, allowing them to gain exposure to ether without needing to directly purchase and store the cryptocurrency. This could significantly boost ether’s liquidity and market capitalization.
The potential introduction of spot ether ETFs may also influence the broader regulatory landscape. It would set a precedent that could lead to the approval of other cryptocurrency-related ETFs, fostering greater acceptance and integration of digital assets into mainstream finance.
The SEC’s recent actions have injected a wave of optimism into the cryptocurrency markets. While there are still several hurdles to clear before spot ether ETFs can begin trading, the regulator’s request for revised applications is a promising step forward. Should the SEC ultimately approve these ETFs, it would represent a major milestone for the cryptocurrency industry, enhancing legitimacy and attracting a new wave of investors. As the market awaits the SEC’s final decision, the developments over the coming weeks will be closely watched by all stakeholders in the crypto space.
