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Spot Ethereum ETF Approval “Weeks Not Days” Says Galaxy Digital Steve Kurz

Last Updated July 3, 2024 11:36 AM
Teuta Franjkovic
Last Updated July 3, 2024 11:36 AM
By Teuta Franjkovic
Verified by Peter Henn

Key Takeaways

  • Galaxy’s Steve Kurz said that Ethereum ETFs will be approved within the month.
  • A clearer regulatory framework and an established futures market is crucial for the development of a Solana ETF.
  • The SEC has postponed its decision on ETH Spot ETFs to July 8

Steve Kurz, the head of asset management at Galaxy Digital, recently expressed optimism about the SEC approving a spot Ethereum ETF by the end of July.

In a July 2 interview , Kurz mentioned that he anticipates approvals within “weeks, not days,” and certainly within the month.

Ethereum ETF Approval Expected Soon, Future of Crypto ETFs Tied to US Legislation

Kurz explained  that Galaxy Digital has been collaborating with the SEC on these applications for several months. Kurz highlighted that the upcoming spot Ethereum ETF is designed similarly to Galaxy’s existing spot Bitcoin ETF (BTCO), both of which were developed in partnership with the investment management firm Invesco.

Kurz furthermore stated that the future of ETFs beyond Ethereum hinges on the passage of legislation in the United States and that he believes that regardless of whether the Democrats or Republicans are in power, progress is being made towards market structure legislation.

He emphasized that the shift in Washington, D.C., is evident and driven by tens of millions of voters, many of whom are single-issue voters focused on cryptocurrency. This shift, he argued, will lead to legislation that supports the development of ETFs beyond Bitcoin and Ethereum. Kurz, however, remains confident that this process will continue even if President Biden is reelected, as the demand for Bitcoin ETFs has clearly demonstrated that investors and retail participants want these financial products.

Solana ETF Requires Clearer Crypto Regulations

Regarding the potential for a Solana ETF, Kurz noted  that while Galaxy Digital has significant exposure to Solana, including being the largest node validator in the Solana ecosystem, the broader legislative framework is more important than any single cryptocurrency becoming an ETF.

He highlighted  the necessity of having a futures market for Solana, similar to those existing for Ethereum, to support the development of a Solana ETF. Kurz pointed out that clarity on what constitutes a security is the most crucial piece of legislation needed.

Galaxy isn’t the only one applying. According to latest news, both VanEck  and BlackRock also applied for the Solana ETF.

Kurz mentioned that courts have played a significant role in providing this clarity, which bolstered their confidence in the approval of an Ethereum ETF. Kurz expects the approval for an Ethereum ETF to come within July, noting that Galaxy Digital has been methodically working with the SEC on this for months, leveraging their experience with the Bitcoin ETF.

SEC Delays Decision on Spot Ethereum ETFs to July 8

After the US Securities and Exchange Commission (SEC) approved exchange-traded funds (ETFs) based on Ethereum (ETH) in May, US investors eagerly awaited the availability of these investment opportunities. However, the SEC has postponed its decision on ETH Spot ETFs to July 8, extending the uncertainty.

In May, the SEC approved applications from Nasdaq, CBOE, and NYSE to list spot ETH ETFs, a surprising win for the cryptocurrency industry, which had expected rejections following discouraging meetings with the regulator.

According to SEC Chair Gary Gensler, the timeline for when these ETFs can start trading depends largely on how quickly issuers respond to the SEC’s queries,

He informed US senators that final approvals for ETFs trading Ethereum are expected to be completed this summer. However, when questioned by the Senate, Gensler avoided clearly classifying Ethereum as either a security or a commodity. Instead, he stated that the agency had only “partially” approved Ethereum ETFs without offering further clarification.

ETH ETF Applications in Limbo – SEC Extends Review Period Again

In May, the SEC postponed its decision on the Invesco Galaxy spot Ethereum exchange-traded fund (ETF).

The agency then said,   that the new deadline for a decision was July 5, 2024. However, it’s now prolonged for three more days. SEC then also has established a deadline of May 23 to decide on VanEck’s Ethereum ETF application that was declined so the company, on June 25, filed Form 8-A for its spot Ether exchange-traded fund  with the United States Securities and Exchange Commission (SEC), bringing the ETF one step closer to live trading.

Several issuers have submitted applications for Ethereum ETFs. These include

In their filing , the SEC explained:

“The Commission finds that it is appropriate to designate a longer period within which to issue an order approving or disapproving the proposed rule change. This will provide the SEC with adequate time to review the proposed rule change and address the concerns raised.”

In April, the SEC announced that it delay its decision on Franklin Templeton’s proposed spot Ethereum ETF to June 11. This information was revealed in a public filing, leaving the future of this financial product uncertain for the time being.

In March, the SEC postponed its decision on whether to approve the BlackRock spot Ethereum ETF. The SEC has set a deadline of May 23 to make a decision on VanEck’s ETF application.

According to analysts from Bloomberg Intelligence , there was widespread speculation that the SEC might finalize its decision on the approval or denial of a spot Ethereum ETF for trading on American exchanges in May.

However, recent delays by the SEC have tempered these expectations. Bloomberg Intelligence analyst James Seyffart has expressed skepticism , suggesting that the current batch of Ethereum ETF applications might ultimately face rejection.

In a separate development, Ethereum development firm Consensys, led by Joe Lubin, filed a lawsuit against the SEC in April.

Lubin said: 

“Consensys has taken a crucial step towards preserving access to ether and, by extension, the Ethereum blockchain in the US. We are suing the SEC and fighting back against its overzealous regulatory overreach.”

Postponed Verdict on Invesco and Galaxy Digital’s Spot Ether ETF

A document  revealed that SEC has solicited public input on various aspects of spot Ethereum ETFs, particularly relating to the application submitted by Invesco Galaxy. Concurrently, the SEC has extended the timeline for this application’s decision by an additional 35 days to allow ample opportunity for the evaluation of public responses:

“The Commission requests that interested persons provide written submissions of their views, data, and arguments with respect to the issues identified above, as well as any other concerns they may have with the proposal.”

James Seyffart, an analyst at Bloomberg Intelligence, then explained that the delay in the decision by the SEC was entirely anticipated and that further postponements are expected in the upcoming months. He emphasized that the critical date for spot Ethereum ETFs is May 23, marking the final deadline for the application by VanEck.

Seyffart further noted that the SEC’s approach to managing ETF applications in traditional finance, characterized by postponing decisions until the final deadline, is a standard practice.

He stated :

“I would say this is the norm. Fairly standard operating procedure.”

SEC Seeks Public Insight on Ethereum Markets Amid Application Delays

The regulatory body has previously called upon the public  to share insights regarding the relationship between the Ethereum spot market and the CME Ethereum futures market. This inquiry aims to assess the accuracy of the applicant’s comparison between a CME Ether Futures product and a proposed spot Ethereum ETF.

In response to these developments, the Ethereum Fear and Greed Index , a tool measuring daily market sentiment for specific assets, witnessed a significant drop of nearly 15% within 24 hours following the announcement.

Ether Fear and greed Index
Credit: CFGI.io

Having previously stood at a ‘greed’ level of 66%, the investor sentiment towards Ethereum has cooled and is currently at 54%.

SEC Delays Boosting Price Expectations

In January, the SEC postponed its decision on key applications related to Ethereum, including Grayscale Investments’ bid to transform its Ethereum trust product (ETHE) into an exchange-traded fund (ETF), as well as BlackRock’s application for an Ether ETF.

This move has led financial behemoths to predict a potential surge in Ethereum’s value. Some forecasters expect ETH to surge by up to 70% increase in the coming months.

In January 2024, Standard Chartered Bank said: “Given the expected approval date on May 23, we foresee ETH prices either mirroring or surpassing the performance of bitcoin (BTC) during the analogous timeframe.”

Ethereum leads major cryptocurrencies with a 4,12% decrease  to $3,304 in the last 24 hours on July 3, 2024.

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