On May 23, the United States Securities and Exchange Commission (SEC) approved eight spot Ethereum exchange-traded funds (ETFs) in an omnibus order. The SEC’s decision came just four months after approving the first spot Bitcoin (BTC) ETFs, indicating a rapid shift in the regulatory environment.
BOOM!! APPROVED! There it is. The SEC just approved spot #Ethereum ETFs. What a turn of events. It’s really happening.
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h/t @PhoenixTrades_ pic.twitter.com/KQ39mDyCbT
— James Seyffart (@JSeyff) May 23, 2024
The SEC filings list eight Ether ETFs from Bitwise, VanEck, Fidelity, Franklin, Grayscale, Invesco & Galaxy, ARK Invest & 21Shares, and BlackRock’s iShares Ethereum Trust, proposed for listing on Nasdaq, NYSE Arca, and Cboe BZX Exchange.
Hashdex’s spot Ether ETF application did not receive approval from the SEC. The asset manager’s investment vehicle faced a final deadline on May 30. It remains unclear whether the regulator will ultimately approve Hashdex’s ETF.
S-1 Form Approvals Critical for Ethereum ETFs Trading
While the 19b-4s have been approved, ETF issuers still require the SEC’s approval on their respective S-1 registration statements for the spot Ether ETFs to commence trading officially. The S-1 registration forms provide in-depth information about newly offered securities to the public. Specifically for ETFs, these forms include investment strategy, the fund’s structure, management, and methods for tracking underlying asset performance. Through these S-1 forms, the SEC evaluates the risk and transparency of the funds.
The SEC recently started discussions with issuers regarding their S-1 forms. Bloomberg ETF analyst James Seyffart said S-1 approvals could come in a “couple of weeks.” He also noted that they “could take longer” as the usual process takes up to five months.
Yea. I think that if they work extremely hard it can be done within a couple weeks but there are plenty of examples of this process taking 3+ months historically
(obviously this situation is nothing like anything that’s happened historically IMO)
— James Seyffart (@JSeyff) May 22, 2024
However, another Bloomberg ETF analyst, Eric Balchunas, suggested that “mid-June is certainly possible.”
The imp part is over. Now just logistics. My guess is there’s only one round of comments on the S-1s. And during btc one round took two weeks ish. So I this mid June is certainly poss. Just a guess tho. We will see.
— Eric Balchunas (@EricBalchunas) May 23, 2024
Unexpected Shift Puts SEC Under Scrutiny
Many market observers find the SEC’s decision surprising. Prior engagements between the regulatory body and ETF issuers provided few hints about forthcoming approvals, sparking speculation about the reasons behind this sudden change. Some say that recent bipartisan pressure from House lawmakers pushed the SEC to treat Ethereum ETFs the same way it treated Bitcoin ETFs in the past.
The surprising decision has led to significant reactions in the market. For example, the discount of the Grayscale Ethereum Trust dropped from 24% to 6% as it moved closer to becoming an ETF. The conversion enables holders to exchange shares for the cash value equivalent of the underlying Ether.
ETH Price Drops
Following the ETF’s approval on May 23, ETH has remained stagnant at $3,700, showing no significant signs of an upward trend. At the time of writing, ETH’s price is trading at $$3,67, reflecting a 3.40% decrease in the last 24 hours.
Read More: Ethereum Remains Range-Bound Around $3700 After ETF Approval: Here’s Why
Ethereum Witnesses $149M in Liquidations Post-ETF Approval
Ethereum saw $104.83 million in long liquidations and $45.02 million in short liquidations, totaling $149.85 million in ETH. The market’s total liquidations reached $390.72 million, affecting 107,615 traders. The trading volume saw a remarkable surge of nearly 92.83% within just 24 hours, reaching a staggering $47.07 billion.
Meanwhile, Bitcoin experienced liquidations totaling $71.69 million. This included $57.97 million from long positions and $13.73 million from short positions. Its 24-hour trading volume has surged by almost 42%, standing at $44.48 billion.
Disclaimer: Cryptocurrency is a high-risk asset class. This article is provided for informational purposes and does not constitute investment advice. You could lose all of your capital.
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