Highlights:
- WisdomTree withdraws its Ethereum Trust filing due to regulatory challenges.
- The SEC’s cautious stance on Ethereum ETFs persists amid market scrutiny.
- WisdomTree Ethereum Trust Withdrawal comes after VanEck’s Ether Futures ETF closure.
American asset manager WisdomTree Investments has requested to withdraw its Ethereum (ETH) Trust S-1 filing with the United States Securities and Exchange Commission (SEC). The initial registration statement was filed on May 27, 2021.
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In a September 6 filing with the regulator, WisdomTree confirmed that “no securities have been or will be issued or sold pursuant to the Registration Statement.” The company acknowledged that it would not receive a refund for the fees paid to the SEC for submitting its registration statement but requested the amount be credited for future use instead. WisdomTree originally applied to list EthereumETF shares on the Chicago Board Options Exchange’s BZX Exchange.
ETF News: @WisdomTreeFunds WisdowTree Ethereum Trust files to withdraw registration.
Appears this S-1 was submitted in 2021.https://t.co/xsLPFiefo8 pic.twitter.com/H1uPSigvcw
— MartyParty (@martypartymusic) September 6, 2024
Regulatory Challenges for Ether Products in the US
The US regulatory environment has played a crucial role in developing and approving cryptocurrency products. The SEC has been cautious about approving cryptocurrency ETFs, especially for Ethereum, due to concerns about market manipulation, investor protection, and inadequate regulatory oversight of cryptocurrency exchanges.
Despite successfully launching a spot Bitcoin ETF, WisdomTree’s decision to withdraw its trust application likely stems from regulatory challenges for Ethereum-based products. Conversely, WisdomTree has experienced success in the UK, where the regulatory environment for cryptocurrency ETNs is more accommodating. WisdomTree oversees four ETN products in the UK—two for Bitcoin and two for Ethereum. The company’s ability to offer both Bitcoin and Ethereum ETNs in the UK underscores the global variations in regulatory approaches to digital assets.
WisdomTree Ethereum Trust Withdrawal Coincides with VanEck’s Futures ETF Closure
This development comes as asset manager VanEck announces the closure of its futures-based ETH ETF. Shares of the VanEck Ethereum Strategy ETF (EFUT) will stop trading on September 16, and the fund will liquidate its assets and return them to investors around September 23.
VanEck’s statement indicates that the decision to terminate the Ethereum Strategy ETF results from a review of multiple factors, including the fund’s performance, liquidity, and operational aspects. Despite its launch on October 2, 2023, EFUT failed to meet the company’s growth expectations.
As of September 7, 2024, the fund had total net assets of $21.24 million and a net asset value (NAV) of $20.23 per share. VanEck created the fund to invest in ether futures contracts rather than Ethereum itself. Although listed on the Chicago Board Options Exchange (CBOE), it did not achieve the sustained investor interest VanEck had expected.
Ethereum ETF Demand Appears Weak: JP Morgan
Spot Ethereum ETFs have faced a challenging start, and according to JP Morgan analysts, drawing direct comparisons to Bitcoin’s highly publicized Wall Street debut isn’t always helpful. Since launching on July 23, nine Ethereum investment vehicles have experienced $476 million in net outflows through August. During the same period, Ethereum’s price fell 30%, from approximately $3,400 to $2,400, reaching its lowest level since February.
Analysts at JP Morgan described the differences as “startling” in a note on Friday. After the first full month of trading, spot Bitcoin ETFs saw cumulative net inflows of $5.4 billion, pushing Bitcoin’s price above $50,000 for the first time in years.
Ethereum ETF Demand Might Look Weak But Bitcoin Comparison Isn't Fair: JP Morgan
► https://t.co/jgyY8pniLk https://t.co/jgyY8pniLk— Decrypt (@decryptmedia) September 6, 2024
However, JP Morgan analysts acknowledge that comparing Ethereum and Bitcoin ETFs isn’t entirely fair. They cited several reasons for the disparity, including Bitcoin’s established reputation as a “store of value” and the lack of staking rewards for spot Ethereum ETFs, which means they don’t capture Ethereum’s full value.
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