The fate of exchange-traded funds (ETFs) linked to the cryptocurrency ether lies in the hands of how quickly issuers respond to the U.S. Securities and Exchange Commission’s (SEC) inquiries, according to Chair Gary Gensler. While the SEC recently gave the green light to Nasdaq, CBOE, and NYSE to list spot ether ETFs, the trading commencement hinges on the approval of the ETF issuers’ registration statements containing investor disclosures. This back-and-forth process between the issuers and SEC officials may determine when the ETFs can officially hit the market.
The recent approval from the SEC to list spot ether ETFs came as a surprise to the cryptocurrency industry, which had anticipated a rejection following discouraging meetings with the regulator. Chair Gensler refrained from speculating whether the registration process would be concluded in a matter of weeks or months, emphasizing that the responsiveness of the registrants will play a crucial role in this timeline.
Chair Gensler shed light on how a court challenge brought by Grayscale Investments last year, which led to the approval of spot bitcoin ETFs in January, influenced the SEC’s stance on the ether products. Grayscale’s successful argument that the approval of bitcoin futures ETFs should pave the way for spot bitcoin ETFs, given the high correlation between futures and spot prices, resonated with the SEC. Drawing parallels between the bitcoin and ether ecosystems, Gensler highlighted the similarities in correlations, pointing out that ethereum futures have been trading since last year.
Acknowledging the evolving landscape of digital assets, Gensler highlighted the SEC’s shift in stance on bitcoin ETFs over the past decade. While the SEC had previously rejected bitcoin ETFs, the court ruling in Grayscale’s favor prompted a reevaluation of the regulatory framework. Gensler underscored the importance of adapting to court judgments and aligning regulatory decisions with market dynamics for a sustainable path forward.
The future of Ethereum ETFs hinges on the responsiveness of issuers to SEC queries, reflecting a broader trend of regulatory adaptability in the evolving landscape of digital assets. With the approval of spot ether ETFs on the horizon, market participants are closely monitoring the developments in the cryptocurrency space for potential investment opportunities.