Apr 9, 2024 - Economy

Ether ETFs: SEC silence saps regulatory optimism

Illustration of the SEC logo with a hand in front making a "shushing" hand motion.

Illustration: Aïda Amer/Axios

Crypto's obsession with investment wrappers was on display in the most recent head fake around an ether ETF decision.

Why it matters: The Securities and Exchange Commission last week started soliciting public comment on proposals for exchange traded funds from Bitwise, Fidelity and Grayscale, leading to another round of speculation on the odds of a regulatory approval in May.

Between the lines: The regulator's not signaling a decision either way; each application is just making its way through the 19b-4 filing process.

  • Barron's Joe Light reported Monday that talks with the SEC have been "largely one-sided" thus far, citing people familiar with the matter.

Context: Spot bitcoin ETFs went through this process before launching in January, but the vibes were different pre-approval than they are for ether (ETH) now.

  • In the weeks leading up to the bitcoin ETF approvals, the SEC met with issuers and provided feedback. Specifics were shared with the public (like about redemption models) and then reflected in changes made to the applications.

My thought bubble: The silence around the ETH ETF now is the loudest signal of all.

  • If an ETH ETF approval were almost here... someone would be spilling the tea on staking, one of the biggest questions marks around this approval process.

Zoom in: There are few comments published on the Federal Register for BlackRock's iShares proposal, or those from Bitwise, and Fidelity.

  • "Tdlr: Ethereum is to 'crypto' what Theranos was to Pharma," according to a commenter called Luther.
  • Another criticized the agency: "It is concerning that most commentators in this space including expert lawyers cite the SEC's hostile disposition as reason for disapproval rather than any legal basis against an ETH spot ETF product."

The bottom line: There aren't any new arguments pro or con, but at least one issuer has presented a business case for a delay.

  • "Spot Ethereum ETFs will gather more assets if they launch in December vs if they launch in May. TradFi needs more time to digest the bitcoin ETFs," Bitwise's Matt Hougan said at a conference last month.
Go deeper