The U.S. Securities and Exchange Commission (SEC) has given all interested parties three weeks to comment on three suggested Ethereum (ETH) spot exchange-traded fund (ETF) proposals submitted by Bitwise, Fidelity, and Grayscale Investments. Feedback on the suggested rule modifications is welcome.
This action follows many hold-ups in the SEC’s Ethereum spot ETF decision-making process. The three ETFs listed below are the focus of the regulator’s current request for public feedback:
- Bitwise Ethereum Trust
- Fidelity Ethereum Fund
- Grayscale Ethereum
This is your chance to add to the regulatory conversation if you have knowledge or comments about these ETFs.
SEC Requests Comment Regarding 3 Spot Ethereum Approval
The latest court papers show that the federal government is trying “to solicit comments on the proposed rule change” from “interested persons.”
According to the court filing, “the proposed rule change is designed to protect investors and the public interest by improving the mechanism of a free and open market and, generally, to protect the listing and trading of an additional type of exchange traded product that will enrich competition among market participants, to the help of investors and the marketplace.”
ETFs for Ethereum
The SEC has a history of delaying its decisions for spot Ethereum ETFs, so the call for comments has been issued. High-profile fund managers like Bitwise, Fidelity, and Grayscale are involved, highlighting the importance of and growing interest among traditional investing organizations in cryptocurrency-based financial products.
The three fund managers are trying to create a spot ETH ETF so that investors can buy shares that track Ethereum’s price. Since the SEC approved 11 Bitcoin ETFs in January, there has been a big effort to get similar regulatory approvals for Ethereum-based products. These funds have subsequently received significant inflows and popularity.
Notably, Coinbase and the SEC had talks on Grayscale’s proposed Ethereum ETF last week. In a recent presentation to the regulator, Coinbase openly endorsed Grayscale’s plan to convert its current Ethereum Trust into a spot ETH ETF.
Different market attitudes are driving the desire for Ethereum ETFs. Although the SEC’s approval of spot Bitcoin exchange-traded funds (ETFs) was noteworthy, experts are still split over Ethereum ETFs’ future.
There are rumors that the SEC may postpone approving the move to separate Ethereum and Bitcoin products over time. Despite this, organizations like Standard Chartered have voiced hope and expect SEC clearance by May.
Correlation between markets
Every notice addresses topics that are anticipated to impact the SEC’s decision to accept or reject the proposed spot Ethereum ETFs.
The notices primarily address whether there is a substantial relationship between the size of the spot ETH market and the futures ETH market and whether connections exist between the two markets. The fact that the SEC has already permitted futures ETH ETFs makes the correlation significant.
A Coinbase analysis that illustrates the link and indicates that fraud and manipulation are rare in the spot Ethereum market was highlighted by NYSE Arca and Grayscale. Additionally, the two businesses claimed that, in contrast to the SEC’s assertions, the Investment Company Act of 1940 does not provide adequate safeguards that would require the denial of specific spot cryptocurrency ETFs.
According to Cboe and Fidelity, their investigation and proposal demonstrate the sizeable amount of the spot Ethereum market. To that purpose, Bitwise and NYSE Arca highlighted their analysis.
The letters also ask for feedback on other matters, like sponsor fees, creation and redemption methods, and fund custodianship. Regular feedback requests don’t tell us whether a fund will be approved or denied.
