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Ethereum ETFs: SEC Opens Comments on Grayscale, Fidelity and Bitwise Applications

Last Updated April 4, 2024 10:00 AM
James Morales
Last Updated April 4, 2024 10:00 AM
By James Morales
Verified by Peter Henn

Key Takeaways

  • The SEC has opened the comment period for ether ETF applications from Grayscale, Fidelity and Bitwise.
  • By the end of May, the agency must either approve or reject applications by VanEck, Ark Invest and Hashdesk.
  • The SEC’s investigation into the Ethereum foundation complicates things for prospective ETF issuers.

With the United States Securities and Exchange Commission (SEC) due to approve or reject the first spot Ether Exchange-Traded Funds by the end of May, the odds of approval don’t look good. But between now and then, interested parties will be able to weigh in on the proposed rule change.

In notices published on Tuesday, April 4, the SEC invited  comments on Ethereum ETF applications from Grayscale, Bitwise and Fidelity. 

SEC Opens Comment Period Ahead of May Deadline Application Process

The SEC should make a decision about four of the eight Ethereum ETF applications by the end of May.

The 21-day comment period for submissions from Grayscale, Bitwise and Fidelity is a standard part of the ETF application process. Nothing in the SEC’s notices indicates that it has changed its position.

If proposals by VanEck, Ark Invest and Hashdesk aren’t approved May 31, the next important date will be June 18. This when a decision about on Grayscale’s application to convert its Ethereum Trust should happen.

Ether vs. Bitcoin ETFs

Although the approval of 10 spot Bitcoin ETFs in January boosted expectations that Ether equivalents would soon follow, that optimism has since subsided.

Whereas the SEC was ultimately coerced into green-lighting Bitcoin ETFs thanks to Grayscale’s crucial court victory last year, there is no equivalent ruling that might force its hand in the case of ETH funds. 

Uncertainty Over ETH Legal Status

One important factor at play for the current ETF applications is the SEC’s ongoing scrutiny of the Ethereum Foundation.

While the agency has not brought any charges, the Ethereum probe could complicate ETF applications if it ignites a legal debate over the legal status of ETH.

Should that happen, courts have to determine whether or not Ethereum is a security. This mirrors the lengthy battle between the SEC and Ripple over the status of XRP.

Fund managers appear to be holding off on pushing for ETFs to be allowed to hold XRP until the Ripple case is finally resolved. Should similar legal uncertainties fall upon Ethereum, efforts to list ETH ETFs may also be put on hold until its legal status is determined for good.

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