Spot Ethereum ETF approved tomorrow, BlackRock maintains approval for 10th consecutive year
The SEC could approve a spot Ethereum ETF as early as this week, which would mark a significant change in its regulatory stance. Bloomberg analysts Eric Balchunas and James Seyffart cited recent conversations and the SEC’s request for an amended 19b-4 filing by 10 a.m. Tuesday, raising the odds of approval from 25% to 75%. These rapid developments have sparked a scramble among applicants, including major players such as BlackRock, Grayscale and Fidelity.
BlackRock, the world’s largest asset manager, has a solid track record with the SEC, with only one ETF application rejected in 2014. The ETF in question, the BlackRock Total Return ETF, was initially rejected due to concerns about transparency and consistency with net asset value. (NAV). However, an updated version of this ETF that addresses the SEC’s concerns was launched in December 2023, just a month before the Bitcoin ETF was approved. This history highlights BlackRock’s ability to successfully navigate regulatory challenges.
The SEC’s decision on the Ethereum ETF has been eagerly anticipated and various application deadlines are approaching. Data from Bloomberg Terminal shared by James Seyffart lists ETFs awaiting approval, including ETFs from VanEck, ARK 21Shares, Hashdex, Grayscale, Invesco Galaxy, Fidelity, Franklin, and Bitwise. These applications have faced multiple delays, but a recent push to amend the documents signals a potential breakthrough.
Grayscale and BlackRock have been actively updating their applications. Grayscale filed an S-3 registration statement to convert the existing Ethereum trust to a spot ETF and the S-1 to a mini Ethereum ETF. The Nasdaq amendment to BlackRock’s 19b-4 filing proposes cash-based creation and redemption consistent with other Ethereum ETF applications and previously approved Bitcoin ETFs.
The SEC’s cautious approach was influenced by concerns about market manipulation and the need for comprehensive market data on Ethereum. However, hopes for a similar product for Ethereum have been raised following Grayscale’s court victory, approval of a spot Bitcoin ETF earlier this year, and the launch of a spot Ethereum ETF in Hong Kong. The SEC’s recent interactions with ETF issuers have been described as one-sided, with agency staff withholding substantive opinions, leading to speculation about a potential rejection.
Despite these challenges, the cryptocurrency community remains optimistic, with Ethereum rising 17% in the last 24 hours. The approval of a spot Ethereum ETF provides a regulated and accessible way for investors to gain exposure to Ethereum, potentially increasing market liquidity and stability. The involvement of prominent asset managers such as BlackRock and Fidelity can add credibility to these products, attracting institutional investors and further driving cryptocurrency adoption.
There are no guarantees, but BlackRock’s history of overcoming regulatory hurdles and approving products suggests the odds are in its favor this week. The approval of the Ethereum ETF will usher in a new era of mainstream cryptocurrency integration.
