Key points:

  • Negotiations between asset managers and regulators on this issue are at the final stage.
  • Eight asset managers, including BlackRock and Grayscale Investments, have filed for the ETF.
  • Ether assets are expected to be lower due to lower market capitalization and trading volumes.

There is a possibility that the US Securities and Exchange Commission (SEC) will approve exchange-traded funds (ETFs) based on the spot price of ether as early as July 4th. It is worth noting that negotiations between asset managers and regulators on this issue are at the final stage.

Ether Spot ETF approval process

Eight asset managers, including BlackRock, VanEck, Franklin Templeton and Grayscale Investments, are in the final stages of clearing exchange-traded fund (ETF) applications with the SEC. Recall that in January of this year, the same companies launched spot Bitcoin ETFs, which was a significant event after a decade of confrontation with regulators.

Grayscale Investments, for its part, is once again attempting to convert its existing trust into an ETF. Sources close to two of the eight companies, who wished to remain anonymous, said there were only “minor” issues to be resolved as the SEC finalized its filings.

Approval of these documents is a prerequisite for launching an ETF. A lawyer representing one of the issuers said “the finishing touches remain” and “probable approval is expected within a week or two.”

SEC Chairman Gary Gensler noted in an interview with Reuters earlier this month that the exact launch date of ETFs depends in part on how quickly issuers respond to regulatory requests.

Can Ether ETFs replicate the success of Bitcoin ETFs?

The launch of Bitcoin spot exchange-traded funds in January 2024 was one of the most successful debuts in the ETF market, attracting approximately $8 billion in assets. As of the end of June, the combined assets of these nine new products reached nearly $38 billion.

It is worth noting that the assets of the Grayscale Bitcoin Trust, which at the same time is converting its $27 billion Bitcoin trust into an ETF, dropped to $17.8 billion.

Many ETF and cryptocurrency market analysts predict that the launch of spot Ethereum ETFs will be smaller in scale. This is because Ethereum is inferior to Bitcoin in both market capitalization and trading volume.

Moreover, the price of ether has fallen more than 11% this month, following Bitcoin’s 9.8% decline. Movements in the Bitcoin price tend to affect the price of Ether.

Given these factors, inflows into Ethereum ETFs are likely to be significantly lower than inflows into Bitcoin ETFs. However, the Securities and Exchange Commission (SEC) has already approved rule changes needed to list and monitor trading of new products on the New York Stock Exchange, Nasdaq and Cboe. This means that once the SEC documents are approved, the ETF could launch within 24 hours.