US SEC Delays Spot Ethereum ETFs Launch, Returns S-1 Forms

Highlights:

• SEC returned ETH ETF issuers’ S-1 forms and requested resubmission by July 8.
• Analysts anticipate Ethereum ETFs may launch by mid-to-late July.
• ETH price and trading volume drop as the market reacts to delayed ETF news.

The launch of United States-based spot Ethereum (ETH) exchange-traded funds (ETFs), which Bloomberg ETF analysts anticipated to occur as early as July 2, has been delayed as the US Securities and Exchange Commission (SEC) has extended its review process. SEC asked prospective Ethereum ETF issuers to re-file their S-1 forms, pushing the launch to mid-July or later.

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Unfort think we gonna have to push back our over/under till after holiday. Sounds like SEC took extra time to get back to ppl this wk (altho again very light tweaks) and from what I hear next wk is dead bc holiday = July 8th the process resumes and soon after that they’ll launch… https://t.co/0ZQR7yiBLt

— Eric Balchunas (@EricBalchunas) June 28, 2024

SEC Comments Postpones Spot Ether ETFs Launch

ETF analysts Eric Balchunas and James Seyffart from Bloomberg have reported that the regulatory body commented on the S-1 forms and requested that issuers address the comments and refile them by July 8. According to Balchunas, this new timeline could postpone the launch of spot Ethereum ETFs until mid-to-late July. 

Nate Geraci, President of the ETF Store, mentioned that the last round of S-1 revisions was relatively minor. He predicts the regulator will clear issuers for trading within 14 to 21 days after resubmission. 

Fwiw, sources close to spot eth ETF filings…

“B/c last round of S-1 revisions were so light, SEC could contact issuers at any point w/ date as to when funds can launch.”

“Timeline to launch is not clear, but we reasonably expect it would be in next 2-3 weeks.”

via @strack_ben pic.twitter.com/rhGtISVTEp

— Nate Geraci (@NateGeraci) June 26, 2024

While the exact timeline is uncertain, the SEC has hinted at a possible launch sometime “this summer.” Balchunas had anticipated an early July ETF launch because the SEC staff had not made significant comments on the ETF applicants’ S-1 filings.

Two-step Process for Ethereum ETFs

The approval of the S-1 forms is the second step in the process necessary for the ETFs to launch. The first step involved the approval of the issuers’ 19b-4 forms in May. The SEC approved 19b-4 forms from eight ETF issuers on May 23. Unlike the 19b-4 forms, the S-1 forms do not have a set deadline, so issuers rely on the SEC’s review and approval timeline. Moreover, issuers updated their registration statements this month, providing additional fees and seed funding details. 

A source told The Block that this won’t be the final filing once the forms are resubmitted. This suggests that at least one more round of filings will be needed before the ETFs can begin trading. The SEC’s thorough review shows its commitment to protecting investors by ensuring Ethereum ETFs meet regulatory standards before they can be traded.

Statements from SEC Chair Gary Gensler

On June 26, SEC Chair Gary Gensler said the process of launching the first spot Ether in the US is “going smoothly”.

Previously, he stated:

These registrants are self-motivated to be responsive to the comments they get, but it’s really up to them how responsive they are.”

 This statement delegates responsibility for the approval process to the issuers, suggesting that the SEC does not intend to deliberately delay it. The SEC has approved a rule change allowing significant issuers to participate, including Grayscale, Franklin Templeton, VanEck, iShares, BlackRock, Fidelity, 21Shares, and Invesco. Some issuers, like VanEck, have filed 8-A forms to prepare for listing on exchanges by July 8. However, Gensler noted that listing spot Ether ETFs on stock exchanges could take months, possibly delaying until September.

ETH Daily Trading Volume Drops by 45%

Following the news, Ethereum has begun to decline. The ETH price fell over 0.45% in the past 24 hours, currently trading at $3,365. Furthermore, the trading volume has decreased further by 45% in the last 24 hours, indicating a decline in traders’ interest.

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