Excitement is building in the crypto community as a newly approved Spot Ether (ETH) exchange-traded fund (ETF) could launch as early as mid-June, although this timeline depends on how quickly approved clients amend their S-1 registration statements and subsequent feedback from the Securities and Exchange Commission (SEC).
Bloomberg ETF analyst James Seifert suggests that S-1 approval could come within a few weeks, but acknowledges that the process could take several months.
Fellow analyst Eric Balchunas remains optimistic, noting that the SEC's feedback process took roughly two weeks for a spot Bitcoin ETF and predicting a mid-June launch.
Key steps: from approval to transaction
After a 19b-4 filing is approved, the next critical step is to secure approval of the S-1 registration statement, which is required to begin trading. VanEck promptly amended its S-1 following 19b-4 approval, and other filers are expected to do so soon.
Potential challenges ahead
A potential challenge would be that the SEC's Trading and Markets Division approves the application under “delegated authority,” meaning any of the five SEC commissioners could challenge the decision within 10 days. However, digital asset lawyer Joe Calasalle noted that such a challenge is unlikely, since the decision was likely unanimously agreed to by all commissioners.
Market impact: analyst predictions
Seifert predicts that if the S-1 is approved, the Spot Ethereum ETF could attract 20% of the Bitcoin ETF's investment flows. Balchunas offers a more conservative estimate of 10-15%. The Bitcoin ETF has garnered $13.3 billion in net inflows in the roughly four and a half months since its launch. If the Spot Ethereum ETF captures 20% of those, it could bring in a staggering $2.66 billion in the same period, attracting investors looking to diversify their crypto portfolios.
The Future of Grayscale's Ethereum Trust
Despite the optimism, there are concerns about the impact on existing products like the Grayscale Ethereum Trust, which holds more than $11.3 billion, and could face significant outflows as investors may favor newer ETFs.
Historically, Grayscale's Bitcoin Trust experienced outflows when it was converted into an ETF format. Major players such as VanEck, BlackRock, Fidelity, Grayscale, Franklin Templeton, ARK 21Shares, Bitwise and Invesco Galaxy received regulatory approval on Thursday, May 23, indicating a strong lineup ready to meet market demand.
But Hashdex failed to receive approval, highlighting the competitive and complex nature of the ETF approval process.
Are you considering investing in a spot Ethereum ETF and why?
Did you know: Ethereum poised for 60% surge as spot ETF approval looms: QCP Report
