The Securities and Exchange Commission (SEC) has reportedly provided final instructions to asset managers preparing to launch Ether exchange-traded funds (ETFs).
According to Bloomberg analyst Eric Balchunas, the SEC has instructed issuers to submit their final S-1 filings by July 16, aiming for a launch of the new funds on July 23. The final filings must detail the fees issuers plan to charge for their crypto funds.
On May 23, the SEC approved issuers’ 19-b forms, proposing rule changes to allow crypto-based investment vehicles. Asset managers now require approval for their initial securities registration S-1 forms.
Several major financial institutions, including BlackRock, Grayscale, Fidelity, ARK 21Shares, Invesco Galaxy, VanEck, Hashdex, and Franklin Templeton, are competing for the approval and launch of Ether ETFs.
In response to regulatory concerns, issuers like ARK Investments and Fidelity have recently removed staking from their Ether ETF plans.
Ether ETFs will feature various fee structures. Invesco and Galaxy have set management fees at 0.25%, slightly higher than VanEck and Franklin Templeton, which have disclosed fees of 0.20% and 0.19%, respectively. These fees are way lower than the 2.50% management fees charged by Grayscale’s Ethereum Trust. Grayscale plans to launch a new spot Ether ETF but has not yet disclosed the new fees.
Analysts predict that ETH ETFs could attract billions of dollars in inflows in the months following their listing, which could fuel the appreciation of Ether’s spot price. Crypto analyst Mark Dunleavy noted that ETH is “less available on exchanges, meaning thinner order books and less to purchase,” making its spot price more responsive to buying demand from ETFs than Bitcoin’s.
Crypto-native hedge funds, which have self-custodied billions of dollars worth of spot ETH for years, are now reaching out to institutional market makers like Virtu Financial to swap those holdings for ETF shares. Upward of a dozen crypto-native funds, each with total assets under management exceeding $1 billion, have shown interest in such exchanges.
Once listed, the spot ETH ETFs will join an existing slate of publicly traded crypto funds, including nearly a dozen spot Bitcoin ETFs that began trading after receiving regulatory clearance in January. Currently, more than $50 billion worth of BTC is held by ETFs.
Earlier in May, the SEC requested updates to 19b-4 filings for spot ether ETFs ahead of deadlines, indicating progress toward approval. Following this request, Bloomberg ETF analysts James Seyffart and Eric Balchunas increased their estimated chances of SEC approval from 25% to 75%.
However, VanEck CEO Jan van Eck questioned the rumors around SEC’s approval, pointing to the regulator’s delays and reluctance. Similarly, asset manager Grayscale withdrew its application for an Ether futures ETF, and its CEO Michael Sonnenshein resigned on May 20.
