The Delayed Approval Process for Spot Ether ETFs

Bitwise, an asset management firm, recently made changes to its S-1 registration with the United States Securities and Exchange Commission (SEC) in order to list and trade shares of a spot Ether exchange-traded fund (ETF). This move comes after SEC Chair Gary Gensler’s announcement that approvals for spot Ether ETFs could potentially be finalized by summer 2024, with some projecting an earlier approval as soon as July. Bitwise’s updated Form S-1 registration statement, filed on July 3, offers a six-month fee waiver for up to $500 million. The filing did not specify a precise launch date for listing and trading on NYSE Arca, but indicated that it would happen “as soon as practicable after the effective date” of the registration.

Bloomberg ETF analyst Eric Balchunas commented on Bitwise’s amended S-1 filing, suggesting that it was submitted before a July 8 deadline and that the update process was quick and straightforward. Balchunas speculated on potential reasons for the SEC’s delayed approval process, proposing that it could be due to issues with specific issuers or simply a slowdown in the summertime. He expressed surprise at the length of time the SEC was taking, noting that the comments on the filings were minimal and could have allowed for quicker approval. The SEC had previously approved spot Ether ETF 19b-4 filings from eight asset managers on May 23, leading to anticipation within the crypto investment community for further progress.

During a June 13 Senate Banking Committee hearing, SEC Chair Gary Gensler indicated that the commission was on track to approve S-1 registration statements for asset managers sometime over the summer. Gensler assured that the registration process for Ethereum exchange-traded products was proceeding smoothly, with individual issuer approvals expected in the near future. However, in a June 5 interview on CNBC, Gensler hinted at a potential delay in the SEC’s approval of spot Ether ETFs, stating that the next steps would “take some time.” Bitwise initially submitted its S-1 for a spot Ether ETF in March amidst speculation that the SEC may classify Ethereum as a security. Nevertheless, court documents from June suggested that this consideration had been dropped by the SEC.

Overall, the delayed approval process for spot Ether ETFs highlights the complexities and uncertainties surrounding regulatory decisions in the crypto space. While stakeholders eagerly await further developments and clarity from the SEC, the industry continues to adapt and evolve in response to shifting regulatory dynamics.