Expectations regarding the approval of Ethereum spot ETFs have kept the asset's price in turmoil in recent weeks. However, observers generally do not seem convinced that this product will see the light soon. Certainly not in May when the deadlines for responding to companies that have applied for it are due.
For years, the crypto community has been waiting for a signal from the Securities and Exchange Commission (SEC) regarding the approval of exchange-traded funds (ETFs) linked to the market price of Bitcoin (BTC). Yet it took 10 years to get a response, and what a response it was.
A similar fate awaits the leader of altcoins, Ethereum?
May will not see the listing of the first Ethereum spot ETFs in the USA
Last January, eleven new exchange-traded investment products directly linked to Bitcoin's market performance, the spot ETFs, saw the light of day for the first time after a decade of waiting.
Since then, the world's largest stock market has seen a wave of institutional interest in the king of cryptos, and something is also changing on the regulatory front.
Now in the running is the second largest crypto token, Ethereum, but the road to approval for spot ETFs will not be paved by the path taken by the older brother.
In fact, several major asset managers have submitted their requests to the SEC, but according to the latest data and reports on meetings with SEC representatives, it seems that no ETH ETFs will be approved in May.
SEC Uses Continuous Postponement Strategy Again
In theory, on May 23rd, the SEC should express its opinion regarding the approval request for an ETF submitted by VanEck, and the day after that on the one submitted by ARK Investment Management. Both entities have managed to list their ETFs associated with the price of BTC on the stock exchange.
The first to not believe that the SEC will express a positive opinion during the next consultation is VanEck's CEO, Jan van Eck himself. The businessman expressed his pessimism as early as April 19th, joining the chorus of skeptics about it.
It should be noted that the CEO stated that he will continue to provide the Commission with all the necessary documentation so that the approval process can continue to be evaluated.
In fact, the SEC is perpetuating the same pattern that has already been seen in the past with the approval process for BTC ETFs.
The first official postponement came on April 23rd for Franklin Templeton
Upon closer inspection, the strategy of continuous postponements is already in full swing. The SEC has indeed postponed decisions regarding two other applicants. Last April 23rd, the US market supervisory authority postponed the decision on Franklin Templeton's request to June 11th. While Grayscale's request was moved to June 23rd.
The news was disseminated with an official statement.
Franklin Templeton's ETF proposal had been filed as early as February and would once again refer to a subsidiary of Coinbase for custody services for the fund's assets. Coinbase Custody Trust Company and the Bank of New York Mellon, in this specific case, would act as custodians of the ETH tokens owned by the fund.
In fact, the SEC has availed itself of a legal right that allows the authority to postpone the deadline for issuing a final decision twice.
The SEC specified in the statement:
"The Commission believes it appropriate to designate a longer period within which to take action on the proposed rule change so that it has sufficient time to consider the amendment and the issues raised therein."
A similar fate has also befallen Grayscale's request linked to Ethereum. As with the Bitcoin-linked Trust, the management company would like to convert the fund into a spot ETF and list it on the stock exchange.
Interest in crypto ETFs is slowing down but still high
The decision of managers to request the listing of these specific investment products responds to a growing demand from investors, especially institutional ones.
After 71 uninterrupted days, yesterday, April 25th, was the first day when capital inflows into BlackRock's Bitcoin ETF were zeroed out. This is a record result that demonstrates the extent of institutional interest in these types of investment vehicles. Legal loopholes in the crypto sector play a crucial role in the success of ETFs.
As long as the sector is not regulated and therefore subject to protections like the traditional stock market, institutional investors will not enter the field directly.
On the other hand, the recent successes of Fidelity and the Bitcoin ETF in attracting large inflows demonstrate the general appetite. Recently, the savings giant received a record $40 million investment from financial advisors at Legacy Wealth Management and United Capital Management of Kansas. This represents the largest single investment in a Bitcoin-linked fund to date.
The investment represents 6% and 5% of their respective portfolios, signaling growing confidence among traditional investors.