- The US is close to launching a Spot Ethereum ETF, following unexpected SEC approvals of fund listings.
- BlackRock’s latest S-1 update boosts optimism, with a US$10 million seed investment in the ETF, named “ETHA”.
- Amendments and rapid regulatory reviews hint at a potential 4 July ETF launch, reflecting progress in ETH regulation.
We are inching closer and closer to a Spot Ethereum exchange-traded fund (ETF) actually being available to purchase in the United States.
While last week saw a surprise twist in the approval of these funds – with the Securities and Exchange Commission (SEC) “suddenly” approving the listing of funds on several US exchanges – we are still waiting for approval for them to be traded.
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Bloomberg analysts James Seyffart and Eric Balchunas had been concerned about a lack of discussions between the regulator and the applicants, but a recent filing has lifted the mood – an update by BlackRock on its S-1 filing.
Seyffart said this is the sort of “engagement we were looking for […] Issuers and SEC are working towards spot Ethereum ETF launches”.
Fellow analyst Balchunas added that the other applicants will probably soon submit their amendments to the regulator.
Then, after another round of “fine-tune comments” by the SEC, a launch could come as early as 4 July, he added. Usually, this process can take months, so seeing this potentially over and done in a few weeks is a great development for ETH and crypto.
The approval last week also came after applicants made amendments; at the time they dropped staking from these funds.
Will Cai, Kaiko Head of Indices, said the removal of staking firmly puts Ether in the commodity basket and that the first approval was a positive signal to the broader crypto market:
This isn’t just about access to ETH, but has significant and likely positive ramifications on how all similar tokens will be regulated in the U.S. with respect to trading, custody, transfer, etc.
Will Cai BlackRock’s amended S-1 filing revealed that a BlackRock affiliate firm seeded the fund by purchasing US$10 million (AU$15 million) worth of shares, equivalent to 400,000 shares at US$25 (AU$37.79) each, on May 21, 2024.
The ETF, named “ETHA,” will list and trade under this ticker.
ETFs Could See Large Outflows of ETH
Kaiko also said that they expect outflows of the Grayscale Ether fund similar to what happened with the Bitcoin GBTC fund. Data shows that BlackRock’s IBIT now holds more BTC than the Grayscale fund.
GBTC saw massive outflows once the other funds started trading with significantly lower fees. Kaiko expects post-approval outflows to the tune of “$110 million of average daily outflows or 30% of ETH’s average daily volume on Coinbase”.
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