Bitwise Asset Management (aka “Bitwise Investments”) has filed with the United States Securities and Exchange Commission (SEC) to list and trade shares of a spot Ethereum ETF.
In a March 28 filing, Bitwise filed a Form S-1 registration statement with the SEC for shares of its spot Ethereum ETF. The filing came amid speculation that the SEC was seeking to label Ether a security under its regulatory purview, putting future listings of spot ETF ETFs into doubt.
Based on a 19b-4 amendment filing with the SEC, Bitwise intends to list shares of the ETH investment vehicle on NYSE Arca. The asset manager was among the first to obtain approval from the SEC for listing and trading shares of its spot Bitcoin ETF in January. As of the close of business on March 27, this ETF held over 30,800 bitcoins.
The final SEC deadline for approving or denying the next round of spot ETH ETF applications will come on May 23, starting with VanEck’s investment vehicle. Though many experts seemed to be optimistic about approval in 2023, some have suggested going into 2024 that the commission could deny applications.
Several firms, including Fidelity, Hashdex, and ARK 21Shares, have spot ETH ETF applications pending approval or denial. The SEC began approving investment vehicles tied to Ethereum futures in October 2023.
On March 25, Craig Salm, the Chief Legal Officer (CLO) of Grayscale Investments, recounted the constructive interactions Grayscale and other entities had with the SEC in the months leading to the Bitcoin ETF approvals. Drawing parallels between those ETFs and the proposed ETH ETFs, Salm noted that the fundamental processes remain identical, with the primary difference being the underlying asset. He argues that the SEC has, in fact, engaged with the issuers on similar grounds before, implying there may be less necessity for engagement this time around.
Salm says the current perceived lack of SEC interaction does not necessarily predict the outcome of the spot Ethereum ETF applications. He supported his stance by aligning with opinions from industry leaders like Paul Grewal, Chief Legal Officer of Coinbase and Brian Quintenz, Head of Global Policy at a16z Crypto, who have cited consistency with ETH futures ETFs, the classification of ETH futures as commodity futures, and the high correlation between futures and spot markets as reasons for approval.
Following the insights shared by Grayscale’s Chief Legal Officer on the approval prospects of spot Ethereum ETFs, Bloomberg’s Senior ETF Analyst, Eric Balchunas, presented a less optimistic analysis. Balchunas articulated doubts regarding the SEC’s inclination to greenlight spot Ethereum ETFs by May 2024, estimating the probability at a “very pessimistic” 25%. He interpreted the SEC’s silence as a strategic choice rather than mere procrastination, pointing out the absence of any optimistic signs or intelligence that might hint at a forthcoming approval. Despite personally wishing for a favourable decision, Balchunas’s commentary suggests a bleak outlook for the near-term prospects of Ethereum ETFs.
At the time of writing, ETH is trading at around $3,540, down 0.9% in the past 24-hour period.
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