Ether ETFs Overcome Major Hurdle, Await SEC Approval for Trading

“A week ago, I would’ve said you were a little crazy to think that these ETFs were going to get SEC approval,” remarked James Seyffart, an ETF analyst at Bloomberg Intelligence.

Ether ETFs have made significant strides toward becoming available in the U.S. as the SEC approved key regulatory filings. Just days ago, the outlook for these ETFs appeared bleak.

On Thursday, spot ether (ETH) exchange-traded funds took a major step forward after the U.S. Securities and Exchange Commission approved essential regulatory filings, marking a milestone for the second-largest cryptocurrency. However, they are not yet cleared for trading. The SEC approved the 19b-4 forms tied to the ETFs, but the S-1 filings must still be approved before investors can trade them.

This approval represents a surprising shift by the SEC. After clearing spot bitcoin ETFs earlier this year, the regulator initially showed little engagement with ether ETF issuers. This changed in recent days.

“A week ago, I would’ve said you were a little crazy to think that these ETFs were going to get SEC approval,” Seyffart said in an interview ahead of the decision.

A Grayscale spokesperson confirmed the regulator’s approval of its 19b-4 form, stating, “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.”

Prospective spot ether ETF issuers include BlackRock, Fidelity, Grayscale, VanEck, Franklin Templeton, Ark/21Shares, and Invesco/Galaxy. While the approval of the 19b-4 filings indicates regulatory willingness to allow spot ether ETFs, it does not guarantee the final approval of the S-1 forms.

“There is likely to be a gap before we see S-1 approvals and these ETFs begin trading. My guess is that this will take at least a week, but likely more. If history is any guide, it could be much longer and be measured in months. But I personally think the gap will be measured in weeks. Everyone is just guessing right now though,” Seyffart said.

The industry was taken by surprise on Monday when reports emerged that issuers were asked to update their 19b-4 filings ahead of the SEC’s deadline to approve or deny one of the issuers, VanEck’s filing.

An SEC spokesperson declined to comment beyond the order published on Thursday.

Andrew Jacobson, Head of Legal at 21Shares, called the approval a significant step in the right direction. Rob Marrocco, Global Head of ETP Listings at Cboe, which plans to list five different spot ether ETF products, expressed excitement about expanding their offerings. He stated, “The 19b-4 approval is a step toward those listings. The introduction of spot bitcoin ETFs in January has already demonstrated significant benefits for the digital assets and ETF space, and we believe that spot Ether ETFs will similarly provide safeguards for U.S. investors, allowing them to gain Ether exposure in a transparent, well-regulated, and easily accessible structure.”

VanEck’s Head of Digital Assets Research, Matthew Sigal, mentioned that VanEck expects to be the first issuer to launch its spot ether ETF.