Ethereum ETF Issuers Submit Revised Applications to SEC

Companies Franklin Templeton, VanEck, and Invesco Galaxy have submitted updated S-1 forms to the SEC for the registration of spot Ethereum-ETFs following a request from the regulator.

Bloomberg analyst Eric Balchunas noted the low management fee proposed by Franklin Templeton, which plans to charge 0.19%, similar to its spot Bitcoin-ETF.

The opening shot in the Eth ETF fee war has been fired from Franklin. 19bps. ? https://t.co/n3yQsaMoYO

— Eric Balchunas (@EricBalchunas) May 31, 2024

On May 30, Grayscale submitted an updated S-3 form. The day before, BlackRock amended its S-1 document.

On May 31, it was revealed from the S-1 form by 21Shares that ARK Invest is no longer a co-issuer of the forthcoming Ethereum-ETF. The instrument has been renamed to 21Shares Core Ethereum ETF.

21Shares confirmed the changes to The Block. However, the companies will continue to work on a joint Bitcoin-ETF, launched in January.

“ARK believes in the transformative potential and long-term value of the Ethereum blockchain, but will not be working on an Ethereum-ETF at this time. We will continue to evaluate effective ways to provide our investors with exposure to this innovative technology in a way that unlocks its full benefits,” stated ARK.

JPMorgan analysts have forecasted significantly lower demand for ETH-ETF compared to funds based on the first cryptocurrency, as reported by The Block.

“The initial market reaction to the launch of spot Ethereum-ETFs is likely to be negative,” stated the report by a team of specialists led by Nikolaos Panigirtzoglou.

The analysts cited the outflow of funds from Grayscale’s ETHE fund, similar to what occurred with GBTC following the launch of Bitcoin-ETFs.

JPMorgan experts highlighted the following key factors for the low demand for ETH-ETF:

• Bitcoin-ETFs enjoyed first-mover advantages and absorbed much of the demand for crypto assets;
• In April, the fourth halving occurred on the network of the first cryptocurrency—Ethereum’s Proof-of-Stake consensus mechanism lacks such an event;
• ETH-ETF issuers excluded the staking option from applications, making them less attractive.

In their view, the net inflow into ETH-ETF by the end of 2024 will range from $1 billion to $3 billion. However, this figure could triple if issuers reintroduce staking at some point.

On May 23, the SEC approved 19b-4 applications from issuers of spot exchange-traded funds based on Ethereum. Trading will commence once the agency signs off on the S-1 registration statements.

Jeffrey Kendrick, head of research at Standard Chartered, suggested a new phase for exchange-traded funds in 2025. In his view, SOL and XRP are next in line.

Analysts at Bernstein predicted the crypto ETF market will surge to $450 billion in the next two years.