The US Securities and Exchange Commission (SEC) on Thursday approved applications from Nasdaq, the CBOE and the NYSE to list exchange-traded funds (ETFs) linked to the price of ether, potentially paving the way for the products to begin trading at a later date this year.
While ETF issuers also need to get the green light before products can be launched, Thursday’s approval is a big surprise win for those companies and the cryptocurrency industry, which until Monday expected the SEC to reject the filings.
Nine issuers, including VanEck, ARK Investments/21Shares and BlackRock, hope to launch ETFs linked to the second-largest cryptocurrency after the SEC approved bitcoin ETFs in January in a watershed moment for the industry.
“This is an exciting time for the industry as a whole,” said Andrew Jacobson, vice president and head of legal at 21Shares, noting that this is a “significant step” toward the launch of product trading.
Thursday was the deadline for the SEC to rule on VanEck’s filing. Market participants braced for a drop because the SEC did not discuss the filings with them.
But in a surprise move, SEC officials on Monday asked exchanges to quickly perfect the filings, forcing the industry to complete a week’s worth of work in just a few days, sources said.
Reuters could not determine why the SEC appeared to have changed its mind.
“The introduction of spot bitcoin ETFs has already demonstrated significant benefits for the digital asset and ETF space, and we believe spot ether ETFs will similarly provide safeguards for US investors,” said Rob Marrocco, global head of ETP listings. in Cboe Global Markets.
Nasdaq and the NYSE declined to comment.
When asked about ether ETFs by reporters at an industry event earlier Thursday, SEC Chairman Gary Gensler — a crypto skeptic — declined to comment. An SEC spokesman said in an email announcing the approval that the agency would not comment further.
Exchange filings sought SEC approval of the rule change required to list the new products, but issuers still need the SEC to approve ETF registration statements detailing investor disclosures before they start trading.
Unlike exchange filings, there is no specific time frame in which the SEC must rule on these statements. Industry participants said it was unclear how long that would take. Two sources familiar with the process said many issuers are ready to go, but the SEC’s corporate finance division has indicated it is likely to request changes and updates in the coming days and weeks.
The SEC has rejected spot bitcoin ETFs for more than a decade due to concerns about market manipulation, but was forced to approve them after Grayscale Investments won a lawsuit last year.
Sui Chung, chief executive officer of CF Benchmarks, an index provider for several bitcoin and ether ETFs, said ether is more complex than bitcoin and it could take months for the SEC to review the filings. But because bitcoin ETFs offer an established template, there’s only so much slow-moving the SEC can do, he said.
A range of investors, including hedge funds, asset advisors and retail investors, have poured more than $30 billion into crypto ETFs.
Thursday’s decision is another blow to the cryptocurrency industry’s efforts to break into mainstream finance. This week, the UK regulator also approved listed cryptocurrency products, while the US House of Representatives passed a landmark bill seeking to provide regulatory clarity for cryptocurrencies.
Although the bill still needs to pass the Senate, its broad bipartisan support is a big boost for the industry.
© Thomson Reuters 2024
(This story was not edited by NDTV staff and was auto-generated from a syndicated feed.)
