By Suzanne McGee and Hannah Lang
(Reuters) – The U.S. Securities and Exchange Commission could approve an exchange-traded fund (ETF) tracking the spot price of ethereum as early as July 4, as talks between asset managers and regulators enter the final stages, industry executives and other sources told Reuters.
Eight asset managers, including BlackRock Inc. (NYSE:), VanEck Inc., Franklin Templeton Inc. and Grayscale Investments Inc., are seeking SEC approval for the funds. Most of them began spot sales of bitcoin ETFs in January, the culmination of a decade-long battle with regulators. Grayscale again wants to convert an existing trust into an ETF.
Executives from both companies, who asked not to be identified because the discussions are private, said the process of amending the offering documents has progressed to the point where only “minor” issues have been ironed out. The documents must be approved before the ETF can launch.
A lawyer working with one of the issuers, speaking on condition of anonymity, said the process was in the “final stages” and that approval would come “probably within the next week or two.”
The SEC declined to comment.In an interview with Reuters earlier this month, SEC Chairman Gary Gensler said the start date would depend in part on how quickly issuers respond to regulators’ questions.
A fund tracking bitcoin’s spot price launched in January and has become one of the most successful in the ETF market, attracting about $8 billion in assets, according to Morningstar Direct data. As of late June, these nine new products had nearly $38 billion in assets, while at the same time, Grayscale Trust, which converted its $27 billion bitcoin trust into an ETF, saw its holdings fall to $17.8 billion.
Many ETF and cryptocurrency analysts believe the launch of the new spot Ethereum ETF is less than impressive.
“They’re not the same size in terms of market cap, they’re not the same trading volume,” said James Butterfill, head of research at CoinShares.
Ethereum prices have slumped this month, dropping more than 11% alongside Bitcoin’s 9.8% decline, and movements in Bitcoin typically impact Ethereum prices.
Morningstar ETF analyst Brian Armour said that an Ethereum ETF, if launched, would likely see much more muted inflows, given the different market sizes and nature of the two cryptocurrencies.
“With bitcoin, there’s been 10 years of pent-up demand and investor interest has been extraordinary,” he said. “It’s unlikely to generate the same kind of excitement this time around.”
The SEC has already approved rule changes needed for the New York Stock Exchange, Nasdaq and Chicago Board Options Exchange to list the new products and oversee trading, meaning products could start trading as soon as 24 hours after SEC staff signs off on the applications.
