The approval of spot Ether (ETH) exchange-traded funds (ETFs) could result in their launch as early as mid-June, following a timeline similar to spot Bitcoin ETFs. Today, spot Ether ETFs received the green light for their 19b-4 filings, allowing them to be listed on their respective exchanges. However, in order to begin trading, applicants will first need approved S-1 registration statements.
Bloomberg ETF analyst James Seyffart has suggested that S-1 approvals could be granted in a “couple of weeks,” but also acknowledged that the process may take longer, typically up to five months. However, fellow Bloomberg ETF analyst Eric Balchunas believes that a mid-June launch is certainly possible. Balchunas predicts that there will only be one round of comments on the S-1 amendments, similar to the feedback provided by the SEC for spot Bitcoin ETF applicants. Based on his estimation, the process would take around two weeks.
VanEck has already filed its amended S-1 shortly after receiving approval for its 19b-4, and other applicants are expected to follow suit soon. However, Gabriel Shapiro, general counsel at Delphi Labs, noted that the SEC’s approval was made by its Division of Trading and Markets unit on a “delegated authority.” He suggests that one of the five SEC Commissioners could challenge the decision within the next 10 days. However, digital asset lawyer Joe Carlasare believes that while a challenge is theoretically possible, it is highly unlikely.
Seyffart disagrees with Shapiro’s view, stating that making decisions with delegated authority is the norm, as requiring an official vote for every decision and document would be impractical. He also believes that a review request would not change the approvals.
If the S-1s are signed off, Seyffart expects spot Ether ETFs to capture 20% of the flows that spot Bitcoin ETFs have seen, while Balchunas estimates a range of 10-15%. Spot Bitcoin ETFs have seen $13.3 billion in net inflows since their launch approximately four and a half months ago. Capturing 20% of that would result in spot Ether ETFs accumulating a combined $2.66 billion over the same timeframe.
There are concerns that the spot Ether ETF market could experience significant outflows from the converted Grayscale Ethereum Trust, similar to the outflows seen with the firm’s converted Bitcoin investment product. Data from Arkham Intelligence reveals that there is more than $11.3 billion locked in the Grayscale Ethereum Trust.
On May 23, regulatory approval was granted to VanEck, BlackRock, Fidelity, Grayscale, Franklin Templeton, ARK 21Shares, Bitwise, and Invesco Galaxy. The only ETF issuer that did not receive approval on that day was Hashdex.