SEC Chair Declines to Set Timeline for Ethereum ETF Launch

SEC Chairman SEC Gary Gensler stated at the Bloomberg Invest summit in New York that the review process for spot Ethereum ETF applications is “going smoothly,” but he did not specify the exact timing for the start of trading.

“I don’t know the exact timing, but everything is going smoothly,” the official noted.

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

By the end of June, BlackRock, VanEck, Franklin Templeton, Grayscale Investments, Invesco Galaxy, and 21Shares submitted updated documents detailing initial investments and fees.

Gensler emphasized that ETF issuers “must fully provide the necessary information” for the registration statements to take effect.

“This [application review] is something our corporate finance department has encountered hundreds, if not thousands, of times. It operates seamlessly — in fact, it is the asset managers who must provide the proper information,” added the SEC chair.

He also reiterated his concern that most digital assets are securities and that crypto companies do not comply with Commission rules.

“The American public is not receiving the disclosure it is legally entitled to and needs,” Gensler stressed.

When asked by billionaire Mark Cuban, who accused Gensler of potentially causing President Joe Biden’s defeat in the upcoming elections, the official declined to respond:

“I don’t talk about elections. My number one priority is the American public. We represent the interests of clients.”

Latest News on ETH-ETF

Bitwise’s Chief Investment Officer Matt Hougan expects a net inflow of $15 billion into U.S. spot Ethereum funds over the first 18 months.

“A good starting point for estimating inflows is to consider the relative volume of BTC and ETH. Ultimately, in the absence of any other information, I would expect investors to allocate funds to bitcoin and Ethereum-based funds roughly in proportion to their market capitalization,” he explained.

Hougan also anticipates that by the end of 2025, the assets under management in spot bitcoin ETFs will reach $100 billion. At the time of writing, the figure stands at $53.56 billion, according to SoSoValue.

Another important factor the Bitwise executive used in his calculations is the various roles that the carry trade strategy can play in BTC and ETH markets.

“$10 billion of the assets under management in existing bitcoin ETFs are tied to carry trade. I don’t expect Ethereum to have the same dynamics — [such a trading model] is currently not profitable for institutions due to the lack of a staking function,” Hougan concluded.

Meanwhile, VanEck’s Head of Digital Assets Research Matthew Sigel stated that the company plans to waive fees for a potential ETH-ETF initially.

VanEck to Waive Fee Initially on Spot Ethereum ETF

In an email to ETF dot com, Matthew Sigel, head of digital assets research for VanEck, wrote that the firm “aims to be a leader on crypto ETF fees even if it means we lose money at the outset.”

They left out the 2nd part of the…

— matthew sigel, recovering CFA (@matthew_sigel) June 25, 2024

“The firm aims to be a leader on crypto ETF fees, even if it means we lose money at the outset. […] The plan is to compensate for volume, in this case, the volume of decentralized finance,” he wrote.

VanEck will waive fees for the ETH-ETF until the fund’s assets exceed $1.5 billion.

Previously, the asset manager filed an 8-A form for its Ethereum instrument. Approval of the document will allow the company to begin trading after the product’s listing.

Bloomberg analyst Eric Balchunas reported a postponement of the spot Ethereum ETF launch date to July 2 after issuers received comments on the S-1 forms.

Earlier, Gensler noted that he expects the bureaucratic procedures to conclude for the start of trading in exchange-traded funds based on the second-largest cryptocurrency by the end of summer.