The Securities and Exchange Commission has delayed making a decision on Invesco Galaxy’s application for an Ether ETF, with the next deadline on July 5.
JP Morgan Reveals Likelihood Of Spot Ethereum ETFs Getting Approved
Now that Spot Bitcoin ETFs have been approved by the United States Securities and Exchange Commission (SEC), the crypto space anticipates more ETFs to enter the market, particularly Spot Ethereum ETFs.
Despite this, analysts at JP Morgan, an American multinational financial service firm, have revealed a less than optimistic outlook for the potential approval of Ethereum Spot ETFs.
Ethereum Spot ETF Approval Prospects
In a note to clients issued on Thursday, January 18, JP Morgan analysts led by Nikolaos Panigirtzoglou, the Managing Director at the financial service firm, expressed their reservations regarding the anticipated approval of Spot Ethereum ETFs by the SEC.
The analysts cited regulatory and judicial reasons as the basis for their prediction, asserting that the likelihood of Ethereum Spot ETF approval is no higher than 50%.
“While we are sympathetic to the above arguments, we are skeptical that the SEC will classify ether as a commodity as soon as May,” analysts at JP Morgan stated.
Just last week, the SEC delayed the approval of Fidelity’s Ethereum Spot ETF. The regulator postponed its decision date to March 5, 2024, stating it needed more time to evaluate Fidelity’s application. Additionally, the deadline for the SEC’s final decision on the Spot Ethereum ETF applications extends from late January to August 2024.
The most decisive date that would give the crypto space a better outlook on the potential launch of these ETFs is January 25, the deadline for Grayscale’s Ethereum Spot ETF application.
Earlier in June 2022, Grayscale took legal action against the SEC for its rejection of its Spot Bitcoin ETF. In August 2023, the asset management company emerged victorious in its lawsuit, after the US Columbia Court of Appeal ruled that the SEC was wrong to reject Grayscale’s Bitcoin ETF application.
With the SEC’s recent approval of Spot Bitcoin ETF after months of legal and regulatory challenges, many crypto enthusiasts anticipate a lengthy regulatory process before the potential approval of Spot Ethereum ETFs. If Ethereum Spot ETFs are accepted by the SEC, then it would offer investors an unprecedented opportunity to gain exposure to the cryptocurrency without the need to own it.
Why ETH Spot ETF Approval Hovers At 50%
Presently, the regulatory framework surrounding cryptocurrencies in the United States is still shrouded in uncertainty. This includes XRP, which suffered a lawsuit from the SEC after the regulator labeled it a security in 2020. Additionally, there have been many other cryptocurrencies the SEC has identified as a security.
The potential approval of Ethereum Spot ETFs generally hinges on the SEC’s classification of the digital asset, whether it is a commodity or a security. In January 2024, the regulatory agency approved Ethereum futures ETFs, ‘implicitly’ accepting Ethereum as a commodity.
If the SEC identifies Ethereum as a commodity, then the potential approval of an ETF application may be in sight. However, as JP Morgan analysts have stated, it may take a considerable amount of time before the SEC makes that decision.
The regulatory agency has continually taken an aggressive approach in its regulation of cryptocurrencies in the US. Following the approval of Spot Bitcoin ETFs, SEC Chairman Gary Gensler publicly declared that the agency still does not approve or endorse Bitcoin, labeling all cryptocurrencies as investment contracts subject to federal securities laws.
Ethereum ETF Race: BlackRock Wants An Ether Spot ETF
BlackRock has joined the Ethereum Spot ETF race as the asset management company has officially applied to the US SEC and is currently waiting for approval.
BlackRock Files For An Ethereum Spot ETF
Following its Spot Bitcoin ETF filing, BlackRock, an American investment company has taken the proactive step by filing an Ethereum Spot Exchange Traded Fund (ETF) with the United States Securities and Exchange Commission (SEC).
The asset management company submitted the application on November 15, however, BlackRock has stated it formed the Trust as early as November 9.
According to BlackRock, the iShares Ethereum Trust would be used to facilitate the ownership of Ether through the issuance of shares, allowing investors to own a fractional undivided beneficial interest in the net assets of the Trust.
“The Trust was formed as a Delaware statutory trust on November 9, 2023. The purpose of the Trust is to own ether transferred to the Trust in exchange for Shares issued by the Trust. Each Share represents a fractional undivided beneficial interest in the net assets of the Trust. The assets of the Trust consist primarily of ether held by the Ether Custodian on behalf of the Trust,” BlackRock said in its filing.
Presently, the US SEC has not approved any Ethereum Spot ETF filing as well as Spot Bitcoin ETF applications. The regulatory body has delayed multiple applications to be reviewed from January 2024.
The crypto community has remained enthusiastic that the regulatory agency would eventually approve the pending ETF applications, as this could significantly push the growth and development of the crypto ecosystem as well as the cryptocurrencies involved.
Ethereum Price Surges
The price of Ethereum is on the rise following BlackRock’s Ethereum ETF filing. The cryptocurrency’s price climbed almost 2% moving to $2,080 at some point following the announcement of the filing.
The sharp reaction has caused a stir in the cryptocurrency community, as investors gear up for a potential bull run if the US SEC gives its official authorization of Ethereum Spot ETFs.
The price of Bitcoin has also been growing steadily as new companies apply for Spot Bitcoin ETFs. Currently, Bitcoin’s price is trading at $36,408, while ETH is down from its initial surge and trading at $1,952.
The crypto ecosystem is presently watching closely for more updates on the US SEC’s ETF filing approvals and the price changes that follow them.
Valkyrie Taps Into Ethereum Momentum With New ETF Filing
In a filing dated August 4, Valkyrie applied to add an Ethereum futures ETF to its Bitcoin Strategy ETF (BTF). However, it would seem this move was pushed back by the SEC as the asset manager has now filed a separate application to offer an Ether futures ETF.
Valkyrie Moves To Offer Ethereum Futures ETF
In an application dated August 16, Valkyrie seeks the United States Securities and Exchange Commission’s (SEC) approval to offer an Ethereum futures exchange-traded fund (ETF).
If approved, the fund will not directly invest in Ether. Instead, it will focus on purchasing several ether futures contracts to match the total value of the ether underlying the futures contracts with the net assets of the fund.
While this fund is relatively similar to the Bitcoin futures ETF, which has existed since 2021, it differs from the Spot Bitcoin ETF, which prominent institutional firms have filed for. Spot ETFs track the crypto asset’s price, while futures ETFs focus on the asset’s future contracts.
Valkyrie categorically noted this fact as part of its application and stated that investors looking to invest in the price of ether directly should consider investments other than this particular fund.
The application also highlighted the risks involved in investing in this fund as, according to Valkyrie, “the Fund’s investments could decline rapidly, including to zero.” As such, investors should understand that they could lose their entire investment.
As is common with applications such as this, applicants must prove to the SEC that the underlying asset has a regulated market of significant size. And Valkyrie’s filing stated that its fund would be guided by the futures contracts traded on the Chicago Mercantile Exchange (CME).
No First Mover Advantage?
Valkyrie failed to clarify the status of its initial filing in its most recent application. The asset manager had previously tried to add ETH futures contracts to its Valkyrie Bitcoin Strategy ETF (BTF) in a bid to gain a first-mover advantage over other applicants.
Several other asset managers, including Bitwise, ProShares, Grayscale, and Volatility Shares, have also applied to offer an Ethereum futures ETF. However, it remains uncertain in what order the SEC is likely to approve (if it does) these applications, especially with this recent development.
Just like Cathie Wood has suggested regarding the pending Spot Bitcoin ETF applications, the SEC can approve multiple applications at once, which will likely eliminate the first mover advantage, or it can decide to approve them in the order in which these applications came in.
Despite expectations that the regulator will approve an Ether ETF this year, the probability of the SEC approving any of these applications remains uncertain as optimism dwindles.
Failure to launch: Australia’s first 3 crypto ETFs all miss launch day
Three cryptocurrency exchange-traded funds (ETFs) scheduled to launch on the Cboe Australia exchange today were delayed due to “checks” still being undertaken.
