When exchange-traded funds (ETFs) tied to the cryptocurrency ether will be able to start trading depends largely on how quickly issuers respond to inquiries from the U.S. Securities and Exchange Commission, Chairman Gary Gensler said Wednesday.
Last month, the SEC approved applications from Nasdaq, CBOE and NYSE to list spot ether ETFs. It was a surprise victory for the cryptocurrency industry, which had expected the SEC to reject the filings after discouraging meetings with the regulator.
ETF issuers’ registration statements detailing investor disclosures must still be approved by the SEC before they can begin trading. That process usually involves a lot of back-and-forth between ETF issuers and SEC officials.
“Those registrants themselves are motivated to respond to the comments they receive, but it’s really up to them how much they respond,” he said. Gensler declined to say whether he thinks the process will take weeks or months.
Gensler and agency officials did not previously comment on why the SEC appeared to have made a U-turn and approved the ether exchange applications.
Gensler said Wednesday that last year’s court challenge brought by Grayscale Investments, which forced the SEC to approve spot bitcoin ETFs in January, had influenced his thinking about ether products.
Grayscale successfully argued that since the SEC had previously approved ETFs tied to bitcoin futures, it should also approve spot bitcoin ETFs, since bitcoin futures prices are highly correlated with spot prices.
Gensler said the cases are similar since ethereum futures have been traded since last year. SEC staff “looked at these (ether) filings, looked at various correlations … the correlations are relatively similar to the correlations in the bitcoin space,” Gensler said.
After a court ruled in favor of Grayscale last year, the SEC approved spot bitcoin ETFs in January. In a statement at the time, Gensler confirmed the court’s decision, adding that he believed approving the product was “the most sustainable way forward.”
The SEC has rejected bitcoin ETFs for a decade. “The courts ruled differently. We adapted,” Gensler said.
However, he added that he still sees the crypto space as “full of scams, scams and conflicts.”
© Thomson Reuters 2024
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